Communications Bill

Public Bill Committee, 6 February 2003.

Standing Committee E

Communications Bill

Roger Gale (Conservative, North Thanet)

Good morning, ladies and gentlemen. Seconds out, final rounds.Clause 376 Annual report on the Secretary of State's functions

Clause 376 - Annual report on the Secretary of State's functions

John Whittingdale (Conservative, Maldon and East Chelmsford)

The clause deals with the annual report of the Secretary of State. This welcome addition to the Bill was made in response to the Joint Committee's specific recommendation that the Secretary of State should present a review of the exercise of her powers for public interest purposes.

Although the Government made it clear in their response to the Joint Committee that they were willing to accept that the Secretary of State should be required to lay before Parliament a joint report on the exercise of her functions, but they expressed doubt about whether it would be appropriate for the general duties that are applicable to Ofcom to apply also to functions undertaken by the Secretary of State. It would be particularly valuable if in the review the Secretary of State were to make it clear where she may have departed from the general duties applicable to Ofcom and to give the reasons for such action.

The Joint Committee expressed concern, and I should be grateful if the Minister could provide more detail about what actions of the Secretary of State it is envisaged should be covered by the review that is laid before Parliament.

Stephen Timms (Labour, East Ham)

As the hon. Gentleman rightly said, the clause was drafted in response to the recommendations of the Joint Committee—it is one of many provisions that we agreed with the Committee—but I am not sure which part of the clause is causing him concern. Perhaps it is subsection (6), which excludes from the report's coverage functions that, as a result of the Bill, will be transferred from the Secretary of State to Ofcom. That applies even if during the period of the report the Secretary of State was carrying out those functions. For example, the report will not deal with the exercise by the Secretary of State of her spectrum functions, which will be transferred to Ofcom. They will be covered, as now, by the Radiocommunications Agency, which reports to the Secretary of State.

Let explain to the Committee how the clause will work. Subsection (1) provides that the Secretary of State must prepare and lay before Parliament a report on the carrying out of her functions under the

legislation specified in subsection (2). Usually, as required by subsection (4), that will be an annual report laid before Parliament as soon as practicable after the end of the 12-month period, as required under subsection (5). However, the first report will cover a longer period.

Under subsection (3), the report will cover the functions carried out by the Secretary of State from the enactment of the Office of Communications Act 2002 on 19 March 2002 to the end of the 12-month period that begins on the first date appointed under clause 395(2) for clause 2 of this Bill to come into force—that is, the first date on which functions are transferred to Ofcom. Subsection (6) deals with matters that are transferred from the Secretary of State to Ofcom. I hope that my explanation has reassured the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale).

Question put and agreed to.

Clause 376 ordered to stand part of the Bill.

Clause 377 - Review of media ownership

Andrew Lansley (Conservative, South Cambridgeshire)

I beg to move amendment No. 25, in

clause 377, page 320, line 25, at end insert

'and broadcast radio and television services'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following:

Amendment No. 26, in

clause 377, page 320, line 36, at end insert—

'(4A) Any report to the Secretary of State on a review carried out prior to the coming into force of section [broadcasting public interest considerations] must set out OFCOM's recommendations on whether that section ought to be brought into force.

(4B) Any report to the Secretary of State on a review carried out after the coming into force of section [broadcasting public interest considerations] must set out OFCOM's recommendations on the exercise by the Secretary of State of his powers under Part 3 of the Enterprise Act in connection with broadcast radio and television services.'.

New clause 1—Broadcasting public interest considerations—

'(1) Section 58 of the Enterprise Act (c.40) (specified considerations) shall be amended as follows.

(2) After subsection (2), there shall be inserted—

''(2A) The need for—

(a) accurate and impartial presentation of news and factual content in television and radio programming; and

(b) free expression of opinion in broadcast television and radio services

is specified in this section.

(2B) The need for, to the extent that it is reasonable and practicable, a plurality of views in broadcasting television and radio services is specified in this section.''.'.

Andrew Lansley (Conservative, South Cambridgeshire)

Clause 377 provides the duty for Ofcom to conduct regular reviews of media ownership. The Committee will recall that media ownership rules are subject to a reduced number of specific rules on cross-media ownership. That was the subject of much debate in the Joint Committee. As mentioned previously, the Joint Committee did not propose to

the Government that media ownership rules should be abandoned entirely. In fact, it supported some of them, and the majority of members of the Committee supported the retention of more media ownership rules than the Government currently support.

Other members of the Joint Committee can correct me if they think that I am wrong about this, but I think that to say that the Committee took the view that the cross-media ownership rules—even those that it promoted—should necessarily be kept permanently would be to misinterpret the Committee's views. While the Committee felt that there was a case for some specific media ownership rules at present, it believed that Ofcom ought to move towards the progressive abandonment of those media ownership rules over time. That was a compromise of sorts, but a practical one that would benefit from being translated into the legislation.

That immediately raised the question of the process and the way in which it would work. Members of this Committee can vouch from their personal experience for the fact that, in the past, the process was that we returned and legislated regularly to adjust to changing circumstances. My view, which is shared by the Joint Committee, is that that is a bad way of going about legislation, because either we impose tougher rules than are required for the purposes of maintaining plurality in the media, or we go too far in trying to future-proof legislation so that it lasts a few years. To have a mechanism designed for the long term would provide a much better means of future-proofing our management of cross-media ownership rules.

I have confessed that that view was a compromise. My starting point was to ask why we could not allow competition policy to deliver that aim—

John Whittingdale (Conservative, Maldon and East Chelmsford)

Hear, hear.

Andrew Lansley (Conservative, South Cambridgeshire)

My hon. Friend shares my instincts. I was persuaded, not least by analogy to newspaper ownership, although it is only partly relevant, that there was a case for going beyond the normal application of competition rules to protect the specific public interests involved in the ownership of media. If a public interest is expressed in the ownership of newspapers, an even stronger public interest is expressed in the ownership of television and radio services.

By what mechanism do we proceed? The view of the Joint Committee was that a plurality test should be applied across media generally. That is stated in paragraph 224 of its report. The reason why I have not attempted to carry that view into the Bill in the form in which the Joint Committee recommended is, first, because it is designed for all media. We have separately discussed newspaper mergers. There is a case for recognising the special characteristics of the newspaper merger regime in respect of the jurisdictional test that needs to be applied.

Secondly, the Joint Committee, in so far as it expressed the public interest, talked about the maintenance of

''accurate presentation of news, the free expression of opinion and a clear differentiation between the two.''

Whether that can be achieved for newspapers through legislation is arguable: I would argue that it cannot, but others might argue that it can. However, no one is seriously arguing that it should be the role of Ofcom—still less of the Office of Fair Trading under the merger regime—to ensure clear differentiation between the presentation of news and the expression of comment in radio and television services. That is not a practical proposition.

I confess that I have, to an extent, moved away from the Joint Committee's proposals. I would prefer a plurality test to be applied to television and radio services. It might be helpful if I explained the mechanism by which that could be done under amendments Nos. 25 and 26. Clause 377(2) says that, as part of the review of media ownership, the provisions of part 3 of the Enterprise Act 2002 in relation to newspapers—that is, the merger control regime—should be considered. Amendment No. 25 would add at the end of that subsection:

''and broadcast radio and television services''.

Amendment No. 26 would give Ofcom, in addition to its review of media ownership, the duty to make recommendations in its report to the Secretary of State about bringing the plurality test into force. It is important to bear that in mind.

We would not insist at the outset that the plurality test is the only mechanism by which cross-media ownership rules can be maintained. We would leave it to Ofcom to make recommendations about the rest of the media ownership rules, as the Joint Committee explicitly intended. I hope that Ofcom will work in a progressively liberalising direction in relation to those rules. However, it would also have to make a recommendation to the Secretary of State about the bringing into force of the public interest and plurality tests in relation to broadcast radio and television services. New clause 1 would apply the plurality test in practice by inserting it into the Enterprise Act, just as the newspaper public interest considerations specified in clause 361 would add to section 58 of the Enterprise Act.

What would be the benefits of my proposal? First, it is flexible. It is a way of future-proofing the legislation so that if competition authorities were presented with a merger between substantial radio and television operations, they could consider the characteristics of the merger and whether the character of the owner was in any way likely to prejudice the accurate presentation of news, freedom of expression of opinion, or prejudice plurality, which is also specified in new clause 1.

Plurality has a wider meaning than simply the accurate presentation of news; if it did not, we would not specify it separately. It is difficult to specify the need for plurality other than by using the word, and that is what I have done. I have used the language applied elsewhere in the Bill in relation to newspapers. In a sense, plurality is a subjective test, and I make no bones about that. However, its subjectivity does at least mean that the provision is flexible.

Michael Fabricant (Conservative, Lichfield)

I am following my hon. Friend's argument with great interest. He mentioned ''substantial'' radio and television stations. This morning, I looked at December's figures from Rajar—Radio Joint Audience Research. There has been some movement in audience share between radio stations in the past three or four months. In using the word ''substantial'', is my hon. Friend referring to the terms of the licence of a radio station—I refer specifically to radio—or is he talking about market share or reach? The latter is very dynamic.

Andrew Lansley (Conservative, South Cambridgeshire)

I am talking about ''substantial'' as it is used in the Enterprise Act. I am talking about the turnover test—the £70 million test in relation to enterprises that would cease to be distinct for those purposes; and the market share test—a quarter of any given market. We went around that track when we discussed newspapers having a substantial part of the United Kingdom market.

Those are the two tests that I would apply. They would not relate specifically to a particular licence. They would be market related. I have not sought to specify any other distinct jurisdictional test, but if one felt that the normal jurisdictional test under the Enterprise Act were not appropriate for this purpose, one could add additional jurisdictional tests as a qualification in exactly the same way as happens in the newspaper regime, in which newspaper mergers are a specified public interest consideration and there is a separate special public interest consideration to cover small newspaper mergers through the jurisdiction test.

The first advantage of such an approach is flexibility. The second is that it would enable us to apply a regime that prevents restrictions of plurality or improper controls over the media in a way that avoids leaving the type of loopholes found in the existing legislation.

There is a tendency when we reach the latter stages of a Bill to refer to past debates, and we have previously discussed the disqualification of religious organisations from holding licences. It is one of a small number of specific disqualifications with which many of us would like to dispense, but if we do that, there must be a safeguard in place. The benefit of the plurality test is that it does not examine the characteristics of the person who would own a television or radio station by reference to whether they are officer holders in a religious organisation or political party. Instead, it considers whether there is anything in the relationship that the person would have with the radio or television service that might diminish impartiality or prejudice accurate presentation of news and so forth.

In that sense, the test I propose is much more flexible. We would no longer need to discriminate against people who happen to be office holders in religious organisations. We would be examining the personal characteristics of the person or the corporate body rather than employing some pre-existing prejudice about the nature of the ownership of broadcasting services by particular types of people.

The test would also close a loophole. As we have discussed before, if someone has bigoted religious or extreme political views but happens not to be a member of or office holder in a religious body or political party, there is nothing in the disqualifications attached to licences that automatically prevents them owning television and radio services, even though it may be perfectly obvious that such a person would not be suitable. The Government's response would be, ''The problem can be controlled by employing the licence conditions,'' but if those conditions really were sufficient, it would also be possible to use them to deal with bigoted views held by people who are office holders in religious organisations.

If the Government believe that the licence conditions themselves are sufficient to maintain the integrity of television and radio services, why do they continue to propose media ownership rules? The rules are required because the licence conditions, important though they are, are not sufficient. It is assumed by the Government and understood in practice that the ownership of a broadcast organisation can, over time, influence the characteristics of that organisation—through appointments and so forth. If the Government were to go down the route that I suggest, we would be able to prevent the ownership of a broadcast organisation by anybody who could prejudice it in that way; or, if the Bill were so drafted, we could have access to the same kind of conditions that apply to newspaper mergers to prevent the owner of a broadcast station from appointing and dismissing editors and the like in ways that prejudice its impartiality.

Michael Fabricant (Conservative, Lichfield)

Would not the terms of the licence prevent that from happening? The licence that the broadcaster would hold with Ofcom—which is currently held with the Radio Authority or the Independent Television Commission—would prevent a change in the programme output. If the programme output remains constant, is it not irrelevant who the staff are?

Andrew Lansley (Conservative, South Cambridgeshire)

I am grateful to my hon. Friend for that comment, because it helps me to explain the point and takes me on to something else I wanted to say about the subject.

With regard to the impartiality test, in a previous debate, we recognised that material in a news programme can be balanced but not impartial, because—as the Minister for Tourism, Film and Broadcasting probably recalls—it might be being used to set an agenda. A broadcast news service can change the terms of a debate if over time it chooses an agenda that is slanted towards a particular prejudice. We have discussed the fact that the agenda for television is often set by newspapers. In this context, cross-media ownership is one of the issues with which we have to deal. A television news service might adopt the same agenda as was set in a group of newspapers that morning. That is how someone could influence the public over time to believe the same things as that individual believes.

That is more likely to be done for a commercial reason than a political reason—for example, in order to steer people towards believing that a newspaper is presenting the argument that people think is important. Licence conditions do not bear upon that: they would have to be extremely sophisticated to detect that sort of shift over time, and I have not seen any that are sufficiently sophisticated. Let us say that every evening, newspaper X's news programme might subtly begin to include—

Chris Bryant (Labour, Rhondda)

Newspaper PG?

Andrew Lansley (Conservative, South Cambridgeshire)

We are not going to tar any particular person. If a television or radio station uses the same story in its evening news as was told in its owner's newspaper, that can have a big influence.

Chris Bryant (Labour, Rhondda)

I must be misunderstanding the hon. Gentleman. He seems to be suggesting that Ofcom, through the Secretary of State's review, should have a process for checking whether the ''Today'' programme is developing an agenda, and for preventing it from doing so. I should not have used the ''Today'' programme as my example, because that is a BBC programme, and the BBC is covered separately. I should have referred to ITN, or The Sun, or Sky News and The Sun together. Is that really what the hon. Gentleman is suggesting?

Andrew Lansley (Conservative, South Cambridgeshire)

No, I am not suggesting that we should go down the path of trying to exercise editorial control over the long term. We are discussing whether we can have a system of ownership control that is designed to prevent ownership by somebody who is likely to prejudice accurate presentation of news on a broadcasting channel. That is a judgment that would have to be made.

The competition authorities had to look at Mr. David Sullivan. By extension from his previous activities, they reached conclusions about what would be the likely impact on the Bristol Evening Post of his owning it. In my example, one would look at the owner of newspaper X and, by extension from his or her activities, try to draw conclusions about what would be the consequences for television station Y or radio station Z of newspaper X's owner taking control. There would not be continuing editorial control: one would have to make judgments about such things, and if one got them wrong, one would have to try to use licence conditions—they are the back-stop.

The point is not whether we have licence conditions, but the mechanism by which we try to prevent such prejudicial media ownership. Should we do that by applying very few specific rules that hinge on arbitrary distinctions such as the 20 per cent. rule, or should we apply a proper public interest test that allows competition authorities to examine the genuine merits of individuals and acquisitions rather than waving some things through and stopping others?

Michael Fabricant (Conservative, Lichfield)

Notwithstanding the fact that television news is generated by pictures rather than editorial values, does my hon. Friend not think that there are huge dangers in an organisation prejudging

what someone might or might not do? Qualitative judgments would have to be made, but they might be prejudicial and inaccurate because a person would be trying to predict the future.

Andrew Lansley (Conservative, South Cambridgeshire)

That is precisely what we propose to legislate for in relation to newspapers, and it is what we have done for 35 years.

Chris Bryant (Labour, Rhondda)

You argued against it then.

Andrew Lansley (Conservative, South Cambridgeshire)

I have not argued against a newspaper merger control regime. We argued about the regime's characteristics, but we are not against it in principle.

I want a broadcast merger control regime that parallels the newspaper regime. It would have force because it would bear on cross-media ownership. Opportunities for cross-media promotion could be commercially important, and the competition authorities might bite on that in any case because of the possibility of increasing commercial exploitation of market power among connected markets. However, the authorities might bite all the harder if they felt that there would also be an impact on public interest due to diminished plurality.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I have some sympathy with my hon. Friend's argument. He said earlier that judgments on such issues would inevitably be subjective. The competition authorities have greater expertise when adjudicating on matters of economic regulation and dispute, but the public interest test that he proposes would go beyond economics. Would the competition authorities be able to reach a judgment on the issues that he suggests they consider?

Andrew Lansley (Conservative, South Cambridgeshire)

That is a fair question, and the same question applies to newspaper mergers: why would the Competition Commission be an expert on newspaper mergers? The answer is, because the commission may establish a panel for that purpose consisting of people who can bring their expertise to bear.

Kim Howells (Labour, Pontypridd)

It is not the same thing.

Andrew Lansley (Conservative, South Cambridgeshire)

The Minister says that it is not the same thing, but the Competition Commission would act by establishing precisely such a panel. It would be better if Ofcom were not the relevant body because if it were it would become intimately connected with the broadcast market from the standpoint of pursuing the public service remit rather than standing back and examining specific issues in a merger. If Ofcom had additional powers rather than acting in an advisory capacity, there would be a risk, as the hon. Member for Rhondda (Mr. Bryant) implied, of it becoming an all-power media commissar determining who owns what. Under the structure that I propose, the Competition Commission, not Ofcom, would have the power. The division of power between the two when considering mergers is important.

The point of the public interest test is to enable us to liberalise media ownership rules over time, and to move away from arbitrary distinctions and toward a more flexible regime. As Ofcom made recommendations to the Secretary of State, she would have the power to introduce a public interest

test on broadcasters. The process would be entirely complementary.

To pre-empt the Minister, the Government's response to the Joint Committee was that:

''the only way to guarantee sufficient levels of plurality on a cross-media basis is to set clear, specific limits on ownership through a number of key rules.''

That is as assertion for which there is no evidence. We have not attempted to achieve plurality on a cross-media basis through the application of a public interest test, because the many-headed set of competition media ownership rules on broadcasting have prevented us taking that path. They have prevented us from seeing what the market would dictate and understanding how the public interest can properly be protected without a specific set of rules.

The statement in the Government response implies that we are not to have competition in broadcasting because the only way to have a diversity of suppliers in broadcasting is by the application of a set of rules that requires a given number of providers. That is an assertion for which there is no evidence. Unless we adopt a public interest test and relax the media ownership rules, we will not genuinely test what competition is capable of delivering in broadcasting, or whether we can have a flexible regime that allows the market much greater freedom.

One of the worst arguments in favour of the Government's approach appears in their response to paragraph 224 of the Joint Committee's report. The Government said that there was little support from respondents to the consultation for a cross-media plurality test. To be perfectly honest that does not surprise me. It is like asking a group of incumbents whether they want to have something that opens up the market to greater competition. They always say no, because incumbency is generally a good thing, and they want to protect it.

If they have a set of rules, many organisations and businesses in many industries quite like to cleave to those rules, because they are part of their structure of work and the way in which they do their business. For the Government to use in support of their argument the idea that businesses generally prefer to be able to plan according to a clear set of rules seems to me to be completely wrong-headed. The point about being in business is that one is in the business of risk. Being in broadcasting is no different from being in steel manufacturing, and broadcasters ought to understand that they are in a risk business. Those who occupy a position in this very important industry have to justify their actions, especially in relation to merger control, competition and public interest issues. They should understand that they have to justify themselves on those issues and not simply operate within some clear set of rules. To do otherwise is simply to take away risk from businesses whose job it is to operate in a risk business.

The purpose of the amendments is to introduce a plurality test. It would have been much better if we could have discussed this matter before we discussed media ownership rules, but I am sure that those in another place will return to this issue. There is a lot of

genuine belief that the way I suggest would be a better way of proceeding in terms of trying to maintain plurality in the public interest than continuing with the arbitrary set of rules.

Nick Harvey (Liberal Democrat, North Devon)

I am pleased to give my support to the amendments, especially new clause 1. The hon. Member for South Cambridgeshire (Mr. Lansley) made the observation that opinion on what is necessary by way of specific media control ranges from one end of the spectrum, where we find organisations such as News International and BSkyB, which have argued that media ownership should be subject to general competition law and that the provisions of the general law would be adequate to tackle issues of morality, through to the other end of the spectrum, where we find, for example, those representatives of the National Union of Journalists told the Joint Committee that any relaxation would lead to concentration of ownership and in turn

''a reduction in diversity and range of content''.

There is clearly a wide range of views on the issue.

In their policy document, the Government stated that

''competition law alone is not sufficient. It can address issues of concentration, efficiency and choice, but it cannot guarantee that a significant number of different media voices will continue to be heard, and it cannot address concerns over editorial freedom or community voice''

They have hit just about the right note in that statement, and the plurality test that the hon. Gentleman proposes would be a good way to give effect to that policy statement.

All decisions on media ownership controls reflect a balance between plurality and cultural considerations and economic efficiency. The hon. Gentleman presumed in his remarks that we would be making progress towards liberalisation in this field. I agree with him about that, although I am not necessarily confident that we will get there as quickly as he and his hon. Friends think that we might. The plurality test is potentially more important because there are concerns about that issue.

We already have two fairly new pieces of legislation in the Competition Act 1998 and the Enterprise Act 2002; the Communications Bill will complete its passage and will become law during this year; Ofcom, the brand new regulator, will bring together five existing regulators and, in addition, midway through last year the Government chose to put the cat among the pigeons by revolutionising our ownership rules and allowing non-European ownership. Those combined measures will, in every sense, lead to a radical shake-up of how the sector is regulated.

During our previous debates in Committee, I have commented that we will not know for some time how all of those measures will work out. The legislation must be probed and pulled apart, a body of case law will no doubt emerge and Ofcom will take some time to bed down, become effective and prove itself as a regulator. In the context of change and uncertainty in

these fluid times, the kind of plurality test that the hon. Gentleman's amendment would introduce would provide a useful route map or guide for Ofcom as they set about tackling the situation.

The hon. Member for Lichfield (Michael Fabricant) observed that Ofcom and the other competition authorities were being asked to do fairly subjective work. He is right, up to a point. However, I do not accept the hon. Member for Rhondda's point that that is somehow rocket science. The matters are not unduly complex or vastly different from those on which regulators would make decisions generally and in respect of the Bill. It is possible to make rational judgments about the plurality of media voices, as the hon. Member for South Cambridgeshire observed when he moved the amendment. One could consider the track record of the parties who are involved in the proposed merger. Reasonable deductions can be made from such information, although the point has been made that certain media groups allow and sometimes even encourage different editorial policies in different parts of their empires. Nevertheless, reasonable judgments can be made based on track records and past form and that would be a rational way for a test of this kind to be considered and applied.

In addition to the legislative and regulatory changes to which I have referred, the whole sector is going through a period of rapid change. The advance of digital television means that there are many more outlets and that is significantly changing the market. If we look again at the sector in a relatively few years' time, there will be a different situation from that which we see today. Perhaps things are not progressing as quickly as they were when the White Paper came out—we know the reasons why. However, even if things have slowed down a bit, significant change is in hand.

The general merger regime will not adequately protect plurality in the sector and a regime along the lines of that proposed would be helpful. Plurality should be one of the key areas of public interest, and I hope that the Government will yet allow a more explicit statement on Ofcom pursuing the public interest. There is a public interest in maintaining a range of owners and voices in the broadcast media, and achieving that should be one of Ofcom's purposes.

The hon. Member for South Cambridgeshire struck a sensible balance. I would have liked the Joint Committee's original objective to have carried forward and for provisions on newspaper mergers to have contained the proposed consideration of balanced news presentation and freedom of opinion with a clear distinction between the two. However, I am aware of the vociferous lobbying of the newspaper section on the relatively mild provisions that were suggested for its sector, and I shudder to think what would have happened if we had carried forward that entirely admirable additional test.

The proposal is sensible. It would give a framework for consideration of what constitutes the public interest. The hon. Member for South Cambridgeshire is right that as the Bill and Ofcom prove themselves and the shock of American ownership is absorbed, we

will adopt a more liberalised approach. In the meanwhile, the plurality test would be a useful addition to the regulatory book of tricks.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend the Member for South Cambridgeshire began his remarks by saying that his instinct was to rely on competition law whenever possible. He and I come from the same stable, so that is my instinct as well.

Kim Howells (Labour, Pontypridd)

What stable is that?

John Whittingdale (Conservative, Maldon and East Chelmsford)

The Tebbit stable. It produced a lot of winners over the years.

My hon. Friend pointed out that the provisions in the amendment duplicate those in the Bill relating to newspaper acquisitions, which the Committee examined and agreed to. I have greater reservations about applying a plurality test to newspapers than to broadcasters. There are no barriers to entry in the newspaper market and fewer safeguards are required because plurality and competition will come about when people identify and try to fill a gap in the market. That is not always possible in broadcasting, and that has been the justification for putting all sorts of requirements on broadcasting companies that go beyond normal requirements on other commodities. We have addressed that through licence conditions.

There is an interesting debate about whether it is preferable to lay down specified minimum standards in a host of different areas, which the Bill does to public service broadcasters, or whether it is better to have a more general requirement to try to achieve plurality. I can see some attractions in moving away from trying to specify individual desirable outcomes—that will always be a matter for argument—and instead having a more general plurality test. There are, however, some difficulties with that in practice, because plurality is a difficult concept to pin down. As I suggested in my intervention on my hon. Friend the Member for South Cambridgeshire, we are asking for an economic regulator to reach judgments on plurality that are fairly political. That would be difficult, but as my hon. Friend has already said, we have already asked the Government to do that in relation to newspapers.

Plurality might also be attractive to the Government because, as my hon. Friend suggested, it would get them off one or two rather difficult hooks on which they have impaled themselves, not least on the question of religious ownership, about which the official Opposition feel strongly. We spent an interesting morning debating that issue and the Minister may recall that there was a discussion about whether the bar on religious ownership might prove to be in breach of the European convention on human rights. The Minister said that that issue had been tested by the European Court of Human Rights and was rejected. I responded by saying that the judgment was under challenge and that the matter was by no means settled in the European Court. In support of what I said, I shall take this opportunity to draw the Minister's attention to application number 11072/02, which has been assigned to the challenge by the Court. The matter is by no means resolved. The Minister promised me, when we considered the matter earlier,

that he would have a look and come back to me on the status of that challenge.

The Government are in some difficulty and my hon. Friend's amendment could be attractive to them. It would allow them to get away from the specific bans and licence requirements that could lead to argument and which may, in some cases, be in breach of our human rights requirements. Instead, it would enable them to operate under a more general requirement that could be permitted by the Competition Commission. Plurality would, however, have to be examined in advance and it would be difficult to determine.

During my hon. Friend's remarks, the Minister for Tourism, Film and Broadcasting was muttering ''Big Brother'' every now and again. I would not support anything that had the potential to become a Big Brother measure. I can understand why the Minister might express a concern that that potential could exist, but my hon. Friend is not suggesting any such thing.

There is a problem in defining plurality and there will be a problem in examining the specifics of a situation and deciding whether a plurality test has been met. My hon. Friend has done a great service in raising the issues and the Government should certainly explain why they find it acceptable to apply the test to newspapers—a more open market—and not to broadcasters. It is difficult to understand how that could be done in one case and not in the other.

Kim Howells (Labour, Pontypridd)

I hope that the hon. Gentleman and hon. Members will forgive me for having missing the Tebbit stable reference, which I understand was made during last Tuesday's sitting. I would argue that the hon. Member for South Cambridgeshire would fail the famous Tebbit test, even though this is not cricket.

The Government, like the Joint Committee, believe that the principle of plurality is central to achieving democratic debate. By plurality, we mean that in democratic society it is important that people have sufficient sources for information, new and views. The Government believe that the only way to guarantee sufficient levels of plurality, especially on a cross-media basis, is to set clear, specific limits on ownership through a number of key rules. We should continue to remind ourselves that media ownership rules are about ensuring plurality, not competition, for which there are competition rules.

One proposal is that we rely on competition rules to ensure plurality. I believe that the hon. Member for South Cambridgeshire started to suggest that, although the argument became a little clouded. The hon. Member for Maldon and East Chelmsford restated his belief that we did not need anything beyond competition rules. I do not agree, although they are the most important factor and will bring the greatest benefits. In many cases, competition rules can produce an outcome consistent with safeguarding plurality, but they will not always do so, especially when the issue relates to cross-media ownership.

From a purely competition point of view, ownership of assets across a number of media may be acceptable, because they may be thought to involve

different markets. However, such a concentration could present serious plurality concerns, not least because the media owner could achieve a degree of pervasiveness. The same message could be played across different media, giving it greater impact because one media could appear to be independently verifying another. The hon. Member for South Cambridgeshire mentioned a fascinating example of a long-term agenda, which could slant the way in which a subject is treated by the media.

Other hon. Members have argued that what is required is a competition test combined with a plurality test of some type. I did not quite follow the argument of the hon. Member for South Cambridgeshire, but I believe that that was more or less his point. However, although such a regime is right for the newspaper industry, as we have often discussed, that industry does not operate under the same regime as other media sectors. Most individual media markets have media licensing regimes. Within those regimes, we will continue to ensure that there are appropriate controls on any increased concentration or change of ownership.

In contrast, newspapers are not subject to licensing controls and there is no intention that they should be. As there are no licences, it is not practical to place specific limits on ownership in the same way as it is for radio, for which there is a fixed number of licences for each area. Consequently, there is a need for additional provision in the merger control regime to protect the public interest ensuring the accurate presentation of news, free expression of opinion and the plurality of views in the United Kingdom press.

When we deal with other areas of public ownership, the competition plus public interest test is something of a cop-outa technical term, beloved by us competition anoraks. I believe that plurality goes to the heart of what makes a democratic state, so, as far as is possible, Parliament should decide on appropriate limits for media ownership and should also have the opportunity to agree any changes to those limits. The other difficulty with a plurality plus competition test, is that it inevitably leads to uncertainty.

Andrew Lansley (Conservative, South Cambridgeshire)

Before we move on, the Minister or his colleague the Minister for E-Commerce and Competitiveness have argued on several different occasions on specific clauses in the Bill that, because a power is exercised by the Secretary of State, who is accountable to Parliament, the public interest is being defended in a way that is accountable to Parliament. The test is no different. Because it is a public interest consideration, it may be the subject of a Competition Commission report. That report is made to the Secretary of State, who has the power to implement it, and can either act consistently with it or not. Therefore, the measure would be accountable to Parliament.

Kim Howells (Labour, Pontypridd)

Maybe. I would still describe that as a cop-out. We have to make hard decisions about the subject. We should have the ability to revise the rules when necessary, because the market changes, as some hon. Members have made clear.

The other difficulty with a plurality plus competition test is that it inevitably leads to uncertainty, which in turn can lead to unnecessary costs in both time and money. The hon. Member for South Cambridgeshire made a fair point on that subject. The hon. Member for North Devon (Nick Harvey) supported the hon. Member for South Cambridgeshire when he said, ''Well, they would say that, wouldn't they?'' or, in other words, that companies who believed that they had vested interests would not, once they were in that trench, let anyone else in. Of course that is a danger.

However, I would argue that the existing tests for cross-media ownership could hardly be said to have been a great success. They are disliked by the industry, the costs and uncertainties involved have hampered business, and hardly anyone has failed the test. I spent three and a half years at the Department of Trade and Industry as a Minister with responsibility for competition, and I cannot remember one test taking place in the communications sector. There may have been one—I have no doubt that someone will dig one out—but I cannot recall any offhand. We should remember that fact.

There is no equivalent in newspaper publishing to, for example, spectrum scarcity. Ownership is not restricted to a limited number of licenses, as in broadcasting. There is more scope for market entry. There are no licences, and no specific limits are placed on newspaper ownership. We should consider that. We have thought carefully about whether we should introduce the concept of a cross-media plurality test in the merger decisions, and did so most recently in our response to the Joint Committee. The idea was also one of the options in our consultation document on media ownership rules, published last November. However, there was little support from respondents, mainly because of the uncertainty involved in the application on a cross-media basis. As our response said,

''businesses generally preferred to be able to plan according to a clear set of rules.''

I readily acknowledge the point that the hon. Member for South Cambridgeshire made. Of course business prefers such a situation, but we in Committee are trying to balance on a high rope. We have to make sure that business is not burdened by additional rules that I would argue are unnecessary.

Michael Fabricant (Conservative, Lichfield)

Besides, if we are trying to future-proof the Bill, we should remember that in due course, when everyone receives television—and we are talking specifically about television in this instance—through a digital regime, and there are no frequency spectrum problems that limit the number of channels, television could have the freedom that is currently enjoyed by newspapers. Does the Minister agree?

Kim Howells (Labour, Pontypridd)

Yes indeed. I am glad that the hon. Gentleman raised that issue. We had a long discussion, which I do not intend to revisit today, about religious ownership. The opening-up as a consequence of the shift to digitisation will make a big difference.

In an earlier sitting, the hon. Member for South Cambridgeshire expressed some surprise about the way in which industry has responded to the proposal. I told him them, and will tell him now, that that is simply how industry responded, and if he wants to look at the responses, there are all on the website for him to see. Although businesses may be used to dealing with uncertainty daily, they do not actively seek out uncertainty. We should make clear rules when they are appropriate. If we accepted the amendment, we would effectively be putting those who wanted to acquire media assets in a worse position. In addition to complying with the clear and transparent ownership rules and satisfying the competition authorities, an owner would face the further obstacle of satisfying a plurality test. The Bill is intended to remove regulations, not to impose new and unnecessary ones.

Andrew Lansley (Conservative, South Cambridgeshire)

I do not want that moment to pass without the Minister recognising that the structure of the amendments is not necessarily to impose new rules, but to give the option for a further liberalisation of media ownership rules on the one hand, and the introduction of a public interest plurality test on the other. It is not necessarily belt, braces and a piece of string. If we get rid of one, we may want to introduce the other.

Kim Howells (Labour, Pontypridd)

Yes. I would not want the hon. Gentleman to think that I want to reinforce anybody's reputation outside the Committee for wanting additional regulation. By instinct, he is a Tebbit stable deregulator. I want to put that on the record, but the amendment is wrong and I hope that he withdraws it.

Andrew Lansley (Conservative, South Cambridgeshire)

I confess that nowhere in the Minister's argument have I heard something that persuades me that that is not a better route to go down. We finished with the question of whether it would be an additional burden on business. Businesses want to move. If we said to those in the broadcasting industry, ''Do you want to be in a situation where you are essentially governed by competition rules alone?'' most of them would say yes. They have not been in the situation where they have had the application of a public interest test on plurality in addition to that, but if they looked to the newspaper public interest regime, they would recognise that the regime that was being introduced—as distinct from that under the Fair Trading Act 1973—would not be seriously burdensome to the newspaper industry over and above what it must do to satisfy the competition authorities.

If it is a burden, it will be a burden to the small number of potential acquirers of newspapers or broadcasting organisations who would raise serious public interest concerns. Those are not necessarily the people whom we want to relieve of the burden of having to worry about whether they satisfy the test or not. The media ownership rules that will be retained are in a sense predictable, but the reason why the Government have argued for the abandonment of media ownership rules is that the introduction of a more competition-based regime that is more flexible and exposes organisations to mergers and acquisitions

to a greater extent would lead to competitive intensity and hence to greater efficiency.

It is all very well for the Minister to refer to business not taking on extra burdens, but we must move towards greater competitive intensity. I do not like deregulation for the reason that it lets people do what they like; I like it because it lets people do what the market dictates. It makes people responsive to customers, as distinct from to rules. It enables us to move to a position that is more responsive to customers, which the clear set of rules that the Government, and industry to some extent, cleave to do not. The incumbent regime creates a sense of predictability, but predictability in business is not what we want. We want to create competition and improve responsiveness to customers.

I do not intend to press on with my argument, first, because I think that it will be taken up in another place and it is probably better that it should be. Secondly, although the amendments and the new clause are not technically deficient in themselves, we must include such provisions in clause 373 on enforcement. We could then apply rules relating to, for example, the appointment and dismissal of editors for a broadcasting organisation as for a newspaper organisation. As I have not tabled the necessary new clause to amend schedule 8 of the Enterprise Act, I think that it would not be best to pretend that I could amend the Bill now, but leave that to others to take up later.

The Minister did not deal with the questions about the benefits that might flow from Ofcom recommending a move in such a direction. For example, instead of the specific disqualification of religious organisations, it would enable us to behave in a non-discriminatory fashion and deal with individual bodies and people, not discriminate against them because of their religious affiliations. We could deal with people with extreme views of a political or religious character, who are not affiliated to religious organisations. The Government know that the measure is a loophole. They just happen not to be embarrassed by it.

If someone like Mr. David Sullivan were acquiring an organisation in the broadcasting sector, licence conditions would apply. They would constrain the owner of a broadcasting organisation, whereas there are no licence conditions that would constrain a person acquiring a newspaper. To say that that does not change the character of a broadcaster's outlook over time would be misleading. It does. If that were not so, why on earth would the Government continue to have media ownership rules? There is a public interest to be dealt with, and it is just a matter of whether we go down a more flexible route to do so or take the other route. We clearly want a flexible way in which to proceed. The amendment would improve the Bill to a great extent. I hope that, before its passage is concluded here and in the other place, we will see changes in that respect. I look forward to that. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Kim Howells (Labour, Pontypridd)

I beg to move amendment No. 668, in

clause 377, page 320, line 44, leave out 'members' and insert 'persons'.

The amendment corrects an error. Obviously, the reference to ''members'' does not make sense in that context. The intention is that Ofcom should publish its report and bring it to the attention of persons who, in its opinion, are likely to be affected by it. The amendment would give effect to that.

Amendment agreed to.

Clause 377, as amended, ordered to stand part of the Bill.

Clause 378 - Penalties imposed by OFCOM

Nick Harvey (Liberal Democrat, North Devon)

I beg to move amendment No. 524, in

clause 378, page 321, line 4, after 'in', insert—

(a) entertaining a complaint that may lead to a penalty;

(b) considering such a complaint;

(c) determining whether a penalty should be imposed;

(d) '.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss

Amendment No. 525, in

clause 378, page 321, line 19, after 'determining', insert—

(a) whether to entertain a complaint that may lead to a penalty;

(b) the consideration of such a complaint;

(c) whether a penalty should be imposed;

(d) '.

Nick Harvey (Liberal Democrat, North Devon)

Clause 378 requires Ofcom to publish and consult on the procedures that it will follow if it is inclined to impose a penalty under the Bill, and to consult if it wishes to review such procedures. The amendments would extend the range of procedures on which Ofcom should consult to the process of deciding whether or not to entertain a complaint, whether to counter it and whether it should result in a penalty—not just concentrate on how large the penalty should be. Ofcom should be required to operate in accordance with natural justice, to follow best practice and to employ open procedures when considering complaints that may lead to it imposing a penalty. It should have clearly set out procedures for deciding in what circumstances it will consider complaints, how it will deal with them when it has decided to consider them, and how it will decide if a penalty needs to be imposed as well as how much the penalty should be.

It is not difficult to imagine the elements of those procedures. The specific complaint and the person or persons who will make the decision should be clearly identified. There must be opportunities for the licensee and the person making the complaint to make appropriate representations, and an adjudication should be circulated in draft, so that all parties can comment on it. I am not suggesting that Parliament should decide on such procedures. It would be for Ofcom to do that, but it would be reasonable for Parliament to make it a requirement that Ofcom has such procedures, for them to take the form of a

published document and for Ofcom to consult on such procedures before adopting them.

If Ofcom is to use its powers to impose penalties, it is important that it allows all elements of the process to be followed. It is of limited use to have procedures to deal with how a penalty should be imposed if the process the regulator follows in deciding to impose a penalty is not clear and open. In recent years many regulators, as public authorities, have understood that they have to operate within the letter and the spirit of the Human Rights Act 1998, with its emphasis on transparency and proper, fair procedures. It is right that Ofcom should have fair, open and transparent procedures for dealing with something as significant as the imposition of the penalties. The objective of the amendment is relatively straightforward. I am interested to hear what the Minister has to say.

John Greenway (Conservative, Ryedale)

On a point of clarification, will the Minister confirm that there is no measure in the Bill for Ofcom to impose costs as well as penalties on those persons whom it decides are in breach of the provisions? I shall want to return to this important issue when we discuss Ofcom's finances. It is very important that we clarify whether Ofcom has the power to impose costs as well as penalties. As the Minister knows, if it imposes costs, those costs will defray Ofcom's administrative expenses that would otherwise be paid by those who pay fees to Ofcom, whereas penalties will all go to the Treasury.

Stephen Timms (Labour, East Ham)

The hon. Member for North Devon has pointed out the aims of these amendments, and I would not disagree with them. It is right that Ofcom should adopt and follow transparent, fair and consistent procedures when handling complaints. These are particularly important considerations for those involved in complaints that could result in the imposition of a penalty. I hope that I can persuade him that it is not necessary, or indeed desirable, to make further specific provision for that in the Bill. There are already a number of provisions covering the matters to which the amendments relate.

One of Ofcom's general duties in clause 3, to which it will be required to have regard when carrying out any of its statutory functions, is that of best regulatory practice. That encompasses the issues about which the hon. Gentleman expressed concern, such as fairness, transparency and the handling of complaints.

We have actually gone much further than that in a number of respects. Clause 3(3)(b) imposes a more specific duty on Ofcom to have regard to

''principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed''.

I could also point to some of the measures under clause 8 in which we have gone a good deal further.

The existing sectoral regulators already publish a substantial amount of guidance material on how they will deal with complaints under the legislation for which they are responsible. That is readily available through websites and telephone helplines. Interested parties have had an opportunity to comment on and

influence that material, but it is tailored to the particular sectoral regimes and the structure and procedures of the bodies responsible for enforcing them. Ofcom should be given some space to consider what, if any, revision and expansion might be needed to reflect the different requirements and functions under the new regime and the new organisational structure that will operate it.

The Secretary of State is not formally involved in the publication of complaint handling guidance by the sectoral regulators at present. I do not think there is a good reason for micro-managing Ofcom's procedures more closely than is the case with the existing regulators. On the contrary, now we are creating Ofcom as an independent regulator within a framework that we have laid down but which will otherwise operate at arm's length from Ministers, we ought if anything to be less prescriptive, rather than involving Ministers more in these detailed operational matters.

Ofcom needs to be able to act flexibly and quickly in response to the demands of the rapidly moving environment and market in which it operates. The amendment could restrict its ability to do so without producing significant countervailing benefits.

I hope that the hon. Member for North Devon will recognise that it is significant that the new rights of appeal that we are introducing will make it even more important than before that the regulator can demonstrate that it has handled complaints fairly, transparently and consistently. It would be difficult for Ofcom to demonstrate compliance with those requirements in the absence of proper, clear statements of policy and practice on those matters, or if it failed to abide by such statements without good reason. The hon. Gentleman's amendments raise important points, but I hope that he can take sufficient reassurance from my comments to withdraw them.

The hon. Member for Ryedale (Mr. Greenway) asked whether costs can be imposed. They cannot be imposed in penalty cases.

Nick Harvey (Liberal Democrat, North Devon)

I am grateful to the Minister for his reply. I take on board his point that the general provisions in the Bill perhaps provide for such procedures, and he stated that he anticipates that Ofcom will use those general provisions as I have suggested it should, which was useful. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Andrew Lansley (Conservative, South Cambridgeshire)

I beg to move Amendment No. 680, in

clause 378, page 321, line 14, leave out 'and' and insert—

'(aa) the Office of Fair Trading; and'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss Amendment No. 681, in

clause 378, page 321, line 22, at end add

'and to any decision made by the Competition Appeal Tribunal as regards the application of the guidelines and the imposition of penalties, as OFCOM consider relevant.'.

Andrew Lansley (Conservative, South Cambridgeshire)

I hope that these amendments will be a little simpler to deal with than the opening group.

My first point arises from a discussion that we had a long time ago in these proceedings. I was wondering about the deterrent effect. Is it intended that a deterrent effect is to be included in the penalties that would be imposed by Ofcom in relation to certain conduct or contraventions of licence conditions, because it explicitly forms part of the penalty regime in relation to the Competition Act?

That question led me to examine how penalties are constructed in clause 378. Perhaps all that will be in the guidance that Ofcom will publish. The statement will be published in due course. Under section 38 of the Competition Act, the Office of Fair Trading publishes guidance on the penalties in the legislation, which will be used by Ofcom. It might be assumed that Ofcom will have regard to the published guidance from the OFT in relation to penalties under the Competition Act, because they are inexactly complementary. However, nothing in the legislation requires it to do so. Amendment No. 680 proposes that Ofcom must consult with the OFT before it makes its statement on penalties.

I turn to Amendment No. 681. Committee members will be pleased to learn that I have not brought with me the judgment in the Napp Pharmaceuticals case, so I cannot bore them by explaining the considerations that go to make up a penalty in such a case. However, I assure them that they are relatively complex.

The Competition Commission upheld the OFT's decision, but it did not agree with the calculation of the penalty. A substantial part of its judgment was a re-calculation of that penalty. Given that that was pretty much the first case under the Competition Act, as the Minister rightly said, there is the possibility of a substantive appeal on the merits of many of the issues in this legislation, which in due course will go to the Competition Appeal Tribunal—which is the same body as the Competition Commission for these purposes. Therefore, penalty calculations may well become part of case law in relation to Ofcom's decisions. The Minister may tell me that Ofcom will of course be bound to have regard to the decisions made by the Competition Appeal Tribunal, but I am not sure why the ''of course'' argument applies, and why it would not be desirable to refer to it in the Bill.

I looked for a comparable provision in the Competition Act 1998, but it is not quite the same. Section 38(9) is slightly different and says:

''If a penalty or a fine has been imposed by the Commission''—

that is the European Commission—

''or by a court or other body in another Member State in respect of an agreement or conduct, the Director, an appeal tribunal or the appropriate court must take that penalty or fine into account''.

That looks for complementarity with the European competition regime.

I might be missing an answer, but it is desirable that we are clear that Ofcom should take account of decisions made by the Competition Appeal Tribunal on penalties when it sets or revises its statement on penalties. I hope that the Minister will either accept the amendment or reassure us that that will happen.

Stephen Timms (Labour, East Ham)

The hon. Gentleman has accurately anticipated my line of response. Amendment No. 680 would place an express requirement on Ofcom to consult the Office of Fair Trading before publishing the guidelines on penalties. Such consultation is not precluded by the clause. On the contrary, subsection (4)(b), which would come immediately after the insertion proposed in the amendment, provides that Ofcom must consult

''such other persons as they consider appropriate''

in addition to the Secretary of State before publishing guidelines or amendments to them. If there was a situation in which input from OFT would be appropriate—the hon. Gentleman mentioned such situations—Ofcom will consult it. No doubt Ofcom and OFT will want to liase closely over any aspects of the penalty guidelines and their application should issues of consistency with penalties imposed by OFT arise.

It is worth bearing in mind the fact that the circumstances in which such issues could arise are fairly limited. The power and duty to publish guidelines on penalties under the Competition Act 1998 remain reserved to OFT despite the fact that Ofcom will have concurrency. Other regulators, including Ofcom, are required to follow OFT, so there is no question of inconsistency.

There is no concurrency for OFT with regard to powers in the Broadcasting Act 1996, the Wireless Telegraphy Acts or the sectoral regime for networks, services and spectrum in the Bill, because Ofcom alone will exercise those powers. OFT has little enforcement knowledge of many other aspects of Ofcom's remit, such as broadcasting content or telecoms consumer protection. Nevertheless, if appropriate, subsection (4)(b) requires Ofcom to undertake consultation. I hope that that reassures the hon. Member for South Cambridgeshire.

Any decision that Ofcom takes on a specific case will be subject to an appeal on its merits, so there is no risk of injustice in practice. If the consistency and appropriateness of penalty guidelines—whether with OFT or otherwise—needs to be reviewed by an external authority, that can be more properly achieved through the requirement in subsection (5) for Ofcom to consult the Secretary of State. She could look across all regulated sectors and take account of a wide variety of considerations that are not all in the remit of either OFT or Ofcom.

In speaking to amendment No. 681, I shall probably use the ''of course'' response that the hon. Gentleman suggested, although I shall use a slightly different form of words. It goes without saying that Ofcom will have regard to relevant appeal decisions, but it may be reassuring if I make the matter explicit. If Ofcom did not do that, any subsequent decisions that were inconsistent with case law would be likely to lead to appeal and could be struck down. That is a powerful incentive for Ofcom to ensure that it has regard to the appeal decisions.

In the light of that reassurance, I hope that the hon. Gentleman will withdraw the amendment.

Andrew Lansley (Conservative, South Cambridgeshire)

I am glad to have the Minister's reassurance. I understand that concurrency does not relate to all issues, so Ofcom would have to make a statement about guidance.

The mechanisms that relate to the calculation of penalties may be similar to the guidance that the OFT issues on penalties under the Competition Act. The contraventions of licence conditions and the contraventions of prohibitions in the Competition Act could appear similar in some respects. It will make transparent good sense and it would be appropriate for Ofcom to consult the OFT about the setting of penalties, and I do not doubt that it will do that. As is the case with amendment No. 681, in due course everyone must be reminded that that is how they should go about things. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 378 ordered to stand part of the Bill.

Clause 379 - General restrictions on disclosure of information

John Whittingdale (Conservative, Maldon and East Chelmsford)

I shall be brief. It strikes me that the clause is thoroughly desirable in principle, in that it would, according to the explanatory notes

''impose limits on the disclosure of information relating to the affairs of any particular business obtained under the Bill.''

That could be very important to businesses, because the information that they are being required to disclose may often be commercially sensitive and may be of value to their competitors if it were disclosed. Subsection (1) seems entirely sensible, because it prohibits the disclosure of such information while the business in question is still being carried on, unless consent has been obtained from the person responsible for it. However, I am concerned about the subsequent subsections. The explanatory notes tell us that subsections (2) to (5) provide for a limited number of exemptions. However, subsection (2) says:

''Subsection (1) does not apply . . . for the purpose of facilitating the carrying out by OFCOM of any of their functions''

and

''for the purpose of facilitating the carrying out by any relevant person of any relevant function''.

In subsection (3), the relevant persons turn out to be the entire panoply of the regulatory apparatus of the state, including

''any other person specified for the purposes of this subsection in an order made by the Secretary of State.''

Relevant functions turn out to be

''any function conferred by or under this Act'',

''any function conferred by or under any enactment or instrument mentioned''

and

''any other function specified . . . in an order made by the Secretary of State.''

Under the subsequent subsections, information should not be disclosed unless the Government decide that it

should, in which case they would disclose it. Perhaps the Minister will give me some reassurance that the clause provides the proper protection, because it appears not to.

Stephen Timms (Labour, East Ham)

I can give the hon. Gentleman that reassurance. We are living in an era of concern about freedom of information. Indeed, we have legislated on that subject and we would not wish to allow information to be withheld that ought to be available. I agree with the hon. Gentleman that information about businesses that is significant and sometimes sensitive should be responsibly handled. The purpose of the clause is to give businesses as much certainty as possible about how the information may be used. Subsection (1) sets out a basic prohibition on the disclosure of any such information while the business to which it relates is being carried on.

Michael Fabricant (Conservative, Lichfield)

The Minister mentioned the Freedom of Information Act 2000—we will all have to disclose our expenses. What comfort can he offer to companies that information given to Ministers of the Crown in so-called confidence will not be disclosed under the provisions of that Act?

Stephen Timms (Labour, East Ham)

The normal arrangements under the Freedom of Information Act will apply. There are concerns, but when the Government hold information to which citizens should have access, provision should be made for it to be available. The clause provides precisely the reassurance that the hon. Member for Maldon and East Chelmsford seeks.

The hon. Member for Lichfield asks whether the clause is sufficient to reassure those who may be concerned, to which the answer is yes. The Freedom of Information Act does not permit disclosure of information that is prohibited by other Acts, such as the provision in this clause. That provides the balance that we all want.

Question put and agreed to.

Clause 379 ordered to stand part of the Bill.

Clauses 380 to 383 ordered to stand part of the Bill.

Clause 384 - Repeal of certain provisions of the Telecommunications Act 1984

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 693, in

clause 384, page 327, line 1, leave out paragraph (b).

This is to some extent a probing amendment. We seek an explanation from the Government as to why they propose to repeal the power that local authorities currently have under the Telecommunications Act 1984 to contribute to losses incurred by public telecommunication operators in the provision of facilities for their areas. Under section 97 or the 1984 Act, if local authorities think that it would benefit their areas, they can contribute to losses sustained by an operator in providing additional telecommunications facilities or continuing to provide existing ones. Sub-section (4)(b) repeals that provision. It is not apparent why that power should be removed from local authorities. I can envisage circumstances in which a local authority might argue that it is a useful power.

Earlier in the Bill, we spent a long time talking about the desirability of broadband for the public interest. That national interest goes beyond the wish of an individual to have it. It is possible that a local authority might consider helping a telecommunications operator to roll out broadband.

Brian White (Labour, North East Milton Keynes)

The hon. Gentleman may wish to know that my local authority is considering the possibility of helping British Telecom to solve the problem of broadband provision in Milton Keynes.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The hon. Gentleman raises an interesting point that makes my amendment more practical and immediate, and not just probing, as I originally suggested. It could be argued that a contribution from public funds could be defined as state aid, which would be in contravention of Community rules, but that is a matter for the European Commission. Local authorities may want to give assistance that would not breach the state aid rules, but they would be prevented from doing so under the terms of the Bill as drafted. Will the Minister explain why the power should be removed, and address the point made by the hon. Member for Milton Keynes, North-East (Brian White) that it may impinge on discussions currently under way?

Stephen Timms (Labour, East Ham)

I sympathise with the hon. Gentleman's puzzlement, particularly as earlier in the Committee we had a debate in which we envisaged that local authorities would have a wider ability for action, as is the case in the constituency of my hon. Friend the Member for Milton Keynes, North-East. The provision is being removed because there is now more general legislation conferring broader powers on local authorities.

Hon. Members will recall the Government's decision to give that broader power to local authorities so that they could take action in the interests of their communities, and the powers of local authorities in England and Wales were extended under the Local Government Act 2000. As that Act confers on authorities the power under discussion and others, section 97 of the 1984 Act is redundant in respect of England and Wales. The Local Government in Scotland Bill will make it redundant in respect of Scotland for the same reason. However, Northern Ireland does not have similar local government legislation. The effect of section 97 has therefore been preserved in Northern Ireland by means of clause 145 of this Bill.

John Whittingdale (Conservative, Maldon and East Chelmsford)

That is a helpful explanation of why the Government are removing the provision. If I understand the Minister correctly, he is saying that legislation subsequent to the Telecommunications Act 1984 has reinforced the power, so we can remove the original empowerment. On that basis, I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 384 ordered to stand part of the Bill.

Clause 385 ordered to stand part of the Bill.

Clause 386 - Destination of licence fees and penalties

John Greenway (Conservative, Ryedale)

This is an important clause, which replicates existing practice across several public bodies, so that all the money received by Ofcom from penalties, licence fees or the sale of radio, telecommunications or television spectrum will incontrovertibly, and quite properly, go to the Treasury. However, as we saw with the 3G—or third generation—mobile phone licences, the amounts of money can be substantial.

We should briefly air some issues that will be of practical value, and may be controversial in years to come. The Bill gives Ofcom several powers to charge penalties to organisations that are found to be in contravention of the Bill or licence obligations, or that have abused the significant market power conditions. We have debated such matters as we have gone through the Bill. In some instances the sums are not particularly great, but in others, such as in clauses 92 and 93, under which penalties can be imposed for contravention of significant market power or licence conditions in telecommunications, the penalty will be some 10 per cent. of the turnover of the relevant business. In the case of a major mobile telephone company, that would be a substantial sum. Similarly, under clause 231, penalties for licence condition contraventions in broadcasting could be as much as £250,000, or 5 per cent. of qualifying revenue. Potentially, those substantial sums would go to the Consolidated Fund and to the Treasury.

Three issues arise from all this. I touched on the first in an earlier intervention and I am grateful for the Minister's clarification because, at the very least it confirms that I have correctly understood the Bill's provisions. There appears to be no mechanism in the Bill for Ofcom to recover costs from companies that are in contravention of its various provisions dealing with licence conditions and so on. I have some experience of that in a regulatory sense, and I shall explain the difficulty.

I was for 10 years an elected member of the Insurance Brokers Registration Council, which was abolished when the Financial Services Authority was created. The FSA is consulting on how it intends to regulate the general insurance market, particularly intermediaries and brokers. The Insurance Brokers Registration Council was established in 1977 by an Act of Parliament that gave the council no powers whatever to impose fines or recover costs from firms that were found to be in breach of some element of its regulatory provisions. The effect of that was that to some extent firms were not as co-operative as they might have been when investigations of malpractice were being carried out, but the real practical damage was that the cost of all this supervisory and investigative work fell on the rest of the council's members, as it had to be covered in their membership fee.

There is a very real danger that the same problem will arise with Ofcom. We are giving Ofcom huge

powers to investigate potential malpractice—whether it is broadcast companies failing to fulfil their licence obligations or the abuse of significant market power and other licence conditions in the telecommunications sector. I am sure that I do not need to labour the point. It will be time-consuming work. It may not always result in penalties being imposed or people being found to be in breach. We understand that that is part of Ofcom's general duty to supervise the entire marketplace in telecommunications, broadcasting and the media. If the sums involved in this investigative work become substantial, why should the organisations that effectively fund Ofcom's day-to-day work through the administration fees that they are obliged to pay have to contribute to that? Had the Bill given Ofcom the power to recover costs as well as to impose penalties, this problem would not arise.

It will add insult to injury when the accounts that the clause requires are published and people see the amount of money that has been paid into the Consolidated Fund from Ofcom, yet the membership has to pay the cost of all the investigative work and the cost of bringing proceedings against firms that may be in breach. They are likely to ask why they are giving all this money to the Treasury and yet also have to pay for the work that creates the penalties, which then go into the Consolidated Fund.

I may be exaggerating the extent to which Ofcom will use the powers and penalties, and experience will determine whether I am right or wrong. It may be that the problem that I envisage will not occur, but one simply does not know. As the Bill proceeds through Parliament it is important for us to consider whether we are making an error in not providing Ofcom with the power to recover costs from those on whom it imposes penalties. This is the clause stand part debate: I am not seeking to press this point today—but I hope that the Minister will reflect on it. It might even be the subject of some consultation with those affected.

The costs of investigation are very substantial for regulators. It is incongruous that the industry as a whole pays for this work, and yet the penalties that are imposed as a result go straight into the Treasury's coffers: there is no mechanism to defray the costs of that investigative work against those penalties.

Secondly, there may be a case for us considering whether it is right that all the money, particularly the licence fees, goes straight to the Consolidated Fund. I have the germ of a thought: whether we could consider using some of this money—not a substantial amount—to fund some of the many good causes that have been debated throughout the proceedings of this Committee. We have had ideas for things of social value that we would like to do in the media industry, but there is not the money to pay for them. For example, there is the cost of improving access for the blind, partially sighted, deaf and elderly through developments in the design of new technology. Everyone acknowledges that there is huge value and benefit to be obtained from such work and developments, but how do we pay for it? That is perhaps why progress in this area has been slower than

some of the organisations representing disadvantaged people might prefer. Maybe a small amount of money could be put aside for that.

Thirdly, there is access and community radio. The Minister has admitted that it is difficult to see exactly how this will be funded and some of the suggestions that were made were not accepted. I was left with the overwhelming feeling that if a small amount of money—only a few million pounds—could be set aside for access radio then we might see it develop in a way that does not impinge upon the commercial success of independent radio stations that have paid some of this money through the licence fee to be on the air in the first place. We have talked about investment and innovation in radio and television programmes and the difficulty of people with good ideas gaining access to resources with which to develop them. We have talked about the need to improve training within the broadcasting industry. We have also talked about research. Clause 13 gives Ofcom a duty to undertake research, but it does not actually say where the money to pay for it will come from: but it is a duty none the less.

These are areas where it is sensible for us to pause for thought and consider whether in the fullness of time it would be beneficial to introduce a small levy or other mechanism to set aside some of the money, particularly that which comes from penalties imposed on companies involved in malpractice, for a fund from which grants could be made to some of the good causes that I have enumerated.

Finally, I come to what is probably the most compelling point in support of my argument—the fact that the Bill allows the BBC to suffer penalties. We agree wholeheartedly that the BBC should be liable for penalties. That is one of the means by which it can be properly supervised.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Not enough.

John Greenway (Conservative, Ryedale)

My hon. Friend says not enough, but if I understand the Bill correctly, the penalty could be £250,000, and that is not an insubstantial sum. That money would have been paid by licence-fee payers, and so would have been extracted from the public on pain of criminal sanction to ensure that we have a vibrant public service broadcaster, across the broadcast sector, on both television and radio. Given that the Ministers have accepted that penalties should apply to the BBC, is it appropriate that any such penalty levied should go straight to the coffers of the Treasury? Should the money be set aside for some of the good causes that I have outlined?

You have been extremely patient, Mr. Gale. I think that I have said enough to show that there are some loose ends to which Ministers have not yet turned their attention.

Chris Bryant (Labour, Rhondda)

''Loose Ends'' on a Saturday morning.

John Greenway (Conservative, Ryedale)

If the people who appear on that programme were sitting in the Gallery, they would endorse what I have said wholeheartedly, for the simple reason that those are people who want innovation in broadcasting.

Anne McGuire (Labour, Stirling)

Ned Sherrin.

John Greenway (Conservative, Ryedale)

That is precisely the person I was thinking of.

Michael Fabricant (Conservative, Lichfield)

He has been moved to six o'clock.

John Greenway (Conservative, Ryedale)

He still presents the programme, but has been moved to six o'clock.

I think that I have made the point that there are loose ends to be tied up. I understand the difficulty of administering such an arrangement across the industry given the regulatory structures currently in place. However, given that we are creating a single overarching regulator for the entire media and telecommunications industry with all the power and influence that Ofcom will have, surely it would not be beyond the wit of man to devise an arrangement whereby some of the money levied could be set aside to fund the many worthy causes that I have outlined. I commend that thought to the Minister.

Stephen Timms (Labour, East Ham)

I listened with great interest to what the hon. Gentleman said, and was particularly struck by the clear distinction that he drew between good causes on the one hand and the Treasury on the other as opposites on a scale of virtue. As a former Treasury Minister, that is a dichotomy that I would not accept.

Let me explain why we have provided for penalties to be paid to the Consolidated Fund. We want to avoid giving Ofcom any incentive to impose penalties in order to raise income for its activities, as well as the perception that that might be the reason why Ofcom wanted to impose a high penalty. I think that the same could be said if there were a specified list of good causes for which a proportion of the penalties would be made available. That is not to say that I do not have sympathy with some of the causes that the hon. Gentleman listed. Hon. Members will have been impressed by representations that were made during the lobby that was organised on Tuesday by the Royal National Institute of the Blind.

Some elements of Ofcom's work comprise new activities—for example, in the area of media literacy—and perhaps some of those cannot be covered from fees and charges. A number of them may need to be funded by the Government—the Treasury also funds good causes—by various routes. Should there be any shortfall in funding in respect of the new Ofcom activities, such as media literacy, the Government would need to provide support through grants. We have constructed the system correctly. We are not providing any incentive, or any perception of an incentive, for Ofcom, in its own interest or that of the causes it supports, to impose higher penalties than would otherwise have been imposed.

In some areas, we make provision for Ofcom to recover its costs—for example, in relation to disputes. As I said earlier, there is no provision for costs in cases in which penalties are imposed. Our view is that enforcement is an essential part of a regulated market, and is part and parcel of maintaining the regulated system. It is more appropriate that the enforcement costs are spread across all the licence holders and those

who are authorised to carry out services, as is the case for the other regulators such as Ofgem. That is a principle that one could debate, but our view—taken widely and not just in this case—is that maintaining enforcement in the market should be a cost and a benefit to everyone. I understand the force of the argument that only the guilty should pay, but our view is that the measure is an essential part of regulating the market, so it is appropriate that the costs of that {**?tw=.99h**}any problems with that arrangement with the existing five regulators, or with comparable bodies like Ofgem.{**?tw**}

Question put and agreed to.

Clause 386 ordered to stand part of the Bill.

Clause 158 - Payments for use of radio spectrum by the Crown

Michael Fabricant (Conservative, Lichfield)

The clause is welcome. We have, in previous sessions, discussed the problem of the BBC squatting on frequencies. I have previously mentioned access radio, which is licensed by the Radio Authority and has been impeded by the BBC sitting on frequencies. The lack of a fourth independent national radio network was caused by the BBC sitting on a frequency in Essex—if only they had just changed the frequencies across. The clause is welcome because it concerns the use of frequencies by the Crown, not by the BBC.

I seek some clarification from the Minister. It has been argued that the Ministry of Defence has sat on frequencies unnecessarily, preventing their use by commercial organisations, which range from taxis and security firms to the emergency services—the ambulance service, the fire brigade and the police. The long, tragic history of telecoms in the defence industry is part of the problem. The change from VHF to UHF was necessary, and now there is the somewhat urgent need, given the present position, for MOD personnel to change to digital encrypted transmissions. It also needs to have a system that is compatible with that of our US partners, which our system is not, on the whole. The problem is that during the transition the Ministry of Defence sits on frequencies that it uses for the old system while it has frequency allocations for the new system. I guess that the point of clause 158 is to provide an incentive for the Ministry of Defence to relinquish the frequencies that it does not need and to allow spectrum to be freed up for broadcasters and for emergency and commercial organisations that require telecom spectrum.

I have noted that the clause is a logical progression from the Wireless Telegraphy Act 1998. However, I return to the same old question that I asked on Tuesday. Which Secretary of State does it refer to? Several of my colleagues told me that it was any Secretary of State, but the Minister for Tourism, Film and Broadcasting did not make that clear.

Subsection (1) says:

''The Secretary of State may, out of monies provided by Parliament, make payments to OFCOM of such amounts as he considers appropriate''.

It is important to know which Secretary of State that is. If it is any Secretary of State, the Defence Secretary might decide the appropriate amount in the example that I gave about the Ministry of Defence. I suggest that he would not be keen to pay a large sum because that would come out of his budget. If that is the case, the clause has no real power. If the relevant Secretary of State is the Secretary of State for Trade and Industry or the Secretary of State for Culture, Media and Sport, that is a different matter because I assume that either Secretary of State would have the interests of the whole community at heart, and a large fee might be charged to the Ministry of Defence. I use the Ministry of Defence only as an example, because other Government agencies frequency squat.

We need clarification on that and on the extent to which the Secretary of State would take public interest into account. To what extent will the Secretary of State make charges to ensure that frequency squatting is eliminated whenever possible?

Andrew Lansley (Conservative, South Cambridgeshire)

I can help my hon. Friend while I make my remarks because the Joint Committee had more or less the same set of questions as he has.

The Crown does not require a licence, so it does not have to pay for one. However, since the introduction of spectrum pricing in the Wireless Telegraphy Act 1998, and in order to maintain consistency in the system, Government Departments have chosen to make payments within Government to the Radiocommunications Agency of comparable amounts to those that would have been paid if a licence had been required. The Cave review said that that sum paid by the Ministry of Defence was £25 million in 2000–01, which shows that we are not dealing with insignificant sums.

The provision is in the Bill, because we are shifting from a payment within Government, which was not legislated for in the Wireless Telegraphy Act, to a payment to an agency—Ofcom. That must be reflected in legislation.

The Joint Committee thought that the provision was insufficiently transparent. A negotiation of a kind currently occurs within Government between Government Departments and the Radiocommunications Agency. Paragraph 184 of the Joint Committee report said:

''We recommend that the Government ensure, by means of amendment to Clause 119''—

it was clause 119; it is now clause 158—

''if necessary, that there is transparency about the means by which payments by Government departments are calculated.''

However, the Government's reply is that the process will be transparent, because Ofcom's accounts will show payments by Government Departments, so there will be transparency to that extent.

Michael Fabricant (Conservative, Lichfield)

I am grateful for that information. I will ask my hon. Friend the Member for South Cambridgeshire. Perhaps he knows even more than the Minister. When the clause refers to the Secretary of State, which one does it mean? Does it

mean one of the two Secretaries of State responsible for Ofcom, or does it refer to the Secretary of State responsible for the Department making the payment? In that case, it is hardly a deterrent against squatting on the frequencies.

Andrew Lansley (Conservative, South Cambridgeshire)

Legally, the Secretaries of State are one, but in this case, it would be the Secretary of State for the relevant Government Department.

Michael Fabricant (Conservative, Lichfield)

We are saving the Minister's voice by having a discussion among ourselves. My hon. Friend mentioned transparency, but what sort of disincentive is there for the Ministry of Defence?

Andrew Lansley (Conservative, South Cambridgeshire)

We will come to that substantive point. Why should the MOD hand spectrum over? In discussions inside Whitehall, there is a Cabinet Committee, the purpose of which is to have precisely this type of discussion and to organise the proper co-ordination of defence and non-defence use of radio spectrum. Part of that includes trying to ensure that the MOD does not sit on more spectrum than it really requires.

According to the evidence given to the Joint Committee, the Cabinet Committee is jointly chaired by the chief executive of the Radiocommunications Agency and a senior official in the MOD responsible for defence spectrum use. I presume that it will continue in a comparable form, but will include a senior official from Ofcom rather than the chief executive of the Radiocommunications Agency. However, we are changing the regime for the Wireless Telegraphy Acts 1949 and 1998.

The structure of clause 158 includes something new: payments in respect of the grant of recognised spectrum access. Whereas the Crown does not require a licence, just as other users of spectrum might find it desirable to have a grant of recognised spectrum access so might the Crown, especially in cases of non-exclusive use and when there may be problems related to interference.

We can reasonably assume that Government Departments will not only be paying comparable amounts for licences, but comparable amounts for grants of recognised spectrum access. Two questions arise from the clause. First, how does one know what is comparable? We have had spectrum pricing and there is an art as well as a bit of science in trying to arrive at the appropriate incentive price for the use of spectrum. However, the Government's stated preference, wherever possible, is to use an auction as the basis of spectrum allocation by way of pricing.

It can be difficult to predict how much spectrum is worth by way of auction. The auction for third generation licences demonstrated that the Government were capable of significantly underestimating the value of that spectrum, and subsequent auctions have demonstrated that it is possible to significantly overestimate it. The question of whether the Government Department is paying the right amount is difficult to answer. Alternatively, will some new mechanism be applied to derive the comparable amount?

Secondly, for the sake of argument, let us suppose that Departments have the equivalent of licences for use of spectrum and a grant of recognised use of spectrum access. Legally, under the legislation, they will be able to trade it, which is new. We have never had spectrum trading before. Should the MOD find that it has more spectrum than it needs, it has two options. It can hand back the spectrum to Ofcom so that it can be allocated elsewhere, or sell it for profit.

Which of those options will the MOD take? The implication of the evidence given to the Joint Committee was that in those circumstances the Ministry of Defence would be inclined to hand it back rather than to sell it, but it would be interesting to know which the Minister thinks will happen. We are not going to bind legally Departments' behaviour, but if the spectrum were handed back to Ofcom rather than sold, that would be consistent with the regime generally.

Michael Fabricant (Conservative, Lichfield)

As my hon. Friend knows, I have considerable sympathy with the Ministry of Defence and I am the proud owner of a Royal Marines dagger. However, is it not the case that the Ministry of Defence rarely gives up land and often considers that there is no such thing as excess land? What makes my hon. Friend believe that it is ever going to think that it has got excess spectrum?

Andrew Lansley (Conservative, South Cambridgeshire)

I believe that because the experience of recent years suggests that the Ministry of Defence has both become more open to the argument that it is sitting on spectrum that it ought not to sit on and become somewhat incentivised by the payment: £25 million is not an insignificant sum, so the Ministry of Defence, or the Defence Logistics Organisation, has an incentive. If my hon. Friend is asking whether I am absolutely confident about the outcome, the answer is no, but in recent years the tendency has been to move in the right direction.

The Government resisted the idea that Ofcom should determine the amounts that were payable in the same way as they would in relation to incentive pricing. They are leaving the power to do that to Government. It will be transparent in so far as we will see the amounts that Government Departments pay for spectrum, but not transparent in so far as we will not necessarily understand the mechanism by which that amount has been determined. That is one of my key questions with regard to the Government's use of spectrum; the other relates to the application of spectrum trading.

Stephen Timms (Labour, East Ham)

That has been an illuminating discussion. The position is more or less as it was set out in that exchange. At present, non-Crown users are required to have a Wireless Telegraphy Act licence except where the use has been exempted by regulations. Except where there has been a spectrum auction, the level of fees for licences is set out in regulations, which, under the Bill, will be made by Ofcom. Since the introduction of spectrum pricing in 1998, those fees have increasingly reflected the economic value of the spectrum.

As the hon. Member for South Cambridgeshire said, the Crown is not bound by the legislation to have

a licence to use spectrum. The Crown is a significant user of spectrum, and the Ministry of Defence accounts for about 28 per cent. of the spectrum. We have applied the principle that Government Departments should have the same incentives with regard to spectrum efficiency as commercial users. Therefore, Ministers agreed from the introduction of spectrum pricing in 1998 that Government Departments would pay for their spectrum on a comparable basis, and that was strongly endorsed by the independent review of radio spectrum management that was carried out for us by Professor Cave.

We have talked a lot about the Ministry of Defence. Under an agreement between the it and the Radiocommunications Agency, it pays for spectrum on a comparable basis to the private sector, as has been said, and there are similar arrangements for Customs and Excise, the Department for Work and Pensions and other Departments. I wish to underline the point made by the hon. Member for South Cambridgeshire: if the Ministry of Defence surrendered some spectrum, it would no longer pay the charge, so there is a direct financial incentive for it to do so.

The question of how those payments would be determined was raised. In practice, that will be agreed between Ofcom and the Ministry of Defence. However, Government policy is that the Crown should pay a proper amount for its spectrum and that collective agreement will apply to the Ministry of Defence as it will to everybody else. The hon. Gentleman asked me to which Secretary of State the provision refers. We discussed that on Tuesday. As he was told, ''the Secretary of State'' can apply to any Secretary of State. If the Ministry of Defence were using the spectrum, the Secretary of State for that Department would pay.

Michael Fabricant (Conservative, Lichfield)

Surely that is precisely the point that I was making in my earlier speech. What incentive is there for the Secretary of State for Defence to charge his Department excess money, to act as a deterrent from sitting on those frequencies?

Stephen Timms (Labour, East Ham)

I was talking about the Secretary of State who should pay. In practice, the amount in payment is for agreement between Ofcom and the Ministry of Defence, but the principle that has been agreed across Government is that the payment should be on a comparable basis with payments made by the private sector.

Transparency was mentioned by the hon. Member for South Cambridgeshire. We agree that it is desirable. We have set the principle that public sector users should pay on a comparable basis with the private sector. We do not need to go further than we have done to ensure continuing transparency in that area because the amount paid by Departments to the Radiocommunications Agency for access to spectrum is separately identified in the agency's report and accounts, and no doubt that practice will continue when the agency's responsibilities are taken over by Ofcom. That will provide the necessary level of transparency.

Finally, when the Ministry of Defence or the Crown wants to have the benefits of recognised spectrum access, the same will apply. The whole point of enabling the Crown to have recognised spectrum access is to enable spectrum access to be traded. Whether the Ministry of Defence or another Department would do the trading would be for it to decide in the circumstances at the time. However, there is nothing to prevent such trading from taking place—indeed, we would welcome it.

Question put and agreed to.

Clause 158 ordered to stand part of the Bill.

Clauses 387 to 391 ordered to stand part of the Bill.

Schedule 17 - Minor and Consequential Amendments

Stephen Timms (Labour, East Ham)

I beg to move amendment No. 309, in

schedule 17, page 465, line 45, at end insert—

'( ) In subsection (4), for ''specified under subsection (3) shall include'' there shall be substituted ''must include provision for''.'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following:

Government amendments Nos. 310 to 312.

Stephen Timms (Labour, East Ham)

These are drafting corrections. I should be happy to go into detail about the implications of them if members of the Committee wish me to do so, but I do not want to detain them unnecessarily. The amendments are minor drafting proposals, and I hope that they will commend themselves to the Committee.

Amendment agreed to.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I beg to move amendment No. 123, in

schedule 17, page 472, line 42, at end insert—

'Parliamentary Commissioner Act 1967

36A In Schedule 2 to the Parliamentary Commissioner Act 1967 (departments and authorities subject to investigation), there shall be inserted (at the appropriate place in alphabetical order) the following entry—

''Office of Communications''.'.

It might be owing to a lack of imagination on my part, but I find it difficult to see how the Government cannot accept the amendment. However, they have a capacity to surprise me. The purpose of the amendment is simple. It would give the Parliamentary Commissioner for Administration, known to most people as the ombudsman, the ability to adjudicate on complaints against him. We, as Members of Parliament, have regular dealings with the ombudsman and refer to him complaints from constituents against Government bodies. That is a useful avenue of appeal when it seems that a Department or body has acted improperly, or that maladministration, negligence or delay has occurred.

The ombudsman is an important safeguard for consumers. He is entitled to investigate many matters, such as avoidable delay, faulty procedures, unfairness, bias, prejudice and giving misleading or inadequate advice. Most hon. Members consider it important that an independent body is capable of scrutinising the

actions of Departments and adjudicating whether they have behaved properly.

The list of Government bodies that the ombudsman is already entitled to investigate runs to many pages, and I shall not read out all of them, because that would take the rest of this morning's sitting and most of this afternoon's. The ombudsman has the power to investigate complaints against other regulators: it can examine the activities of the Office of the Director General of Water Services, the Offices of the Rail Regulator and of the International Rail Regulator, the Postal Services Commission and the Gas and Electricity Markets Authority. Ofwat, Ofgem, the OFT, Postcomm, Ofsted are in the ombudsman's remit, but also capable of being investigated is Oftel—the Office of the Director General of Telecommunications. Ofcom is replacing Oftel. In addition, the Broadcasting Standards Commission is on the list of organisations that the ombudsman can investigate.

Unless the Government accept our amendment, they will remove the ombudsman from areas in which he can currently investigate complaints, such as telecommunications regulation and the standards of broadcasting regulations. Given that they can see merit in allowing him to examine complaints about other regulators and a large part of the area of responsibility that Ofcom is taking over, I cannot understand how they can argue that Ofcom should be outside the remit of the Parliamentary Commissioner for Administration. Will the Minister think again and accept the amendment?

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I support the persuasive case made by the hon. Member for Maldon and East Chelmsford. Given the smile on his face, I expect the Minister to say that Ofcom's functions will be governed by the ombudsman or the Parliamentary Commissioner for Administration because, as has been rightly pointed out, such a service is much valued by citizens.

People do not necessarily question the decisions that have been made, but the manner of the administration is often the reason why complaints are made to the ombudsman. I draw attention to notable Inland Revenue cases, in which people query its treatment of them. I can foresee circumstances in which individuals consider that Ofcom has treated them poorly and it would be appropriate to take such cases to the Parliamentary Commissioner for Administration. I hope that the Minister will accept the amendment, or tell us that some other part of the Bill provides that the ombudsman will cover Ofcom.

Stephen Timms (Labour, East Ham)

I can soothe the hon. Gentlemen's ruffled sensibilities. We are ahead of them. The Cabinet Office is updating schedule 2 of the Parliamentary Commissioner Act 1967 and will shortly make an order to amend it. Ofcom will be included in that order. We shall reach the precise position that the hon. Members for Sheffield, Hallam (Mr. Allan) and for Maldon and East Chelmsford have argued in favour of, albeit by a different route.

Michael Fabricant (Conservative, Lichfield)

Was the Cabinet Office taking such action before we tabled the amendment?

Stephen Timms (Labour, East Ham)

I can say that the matter is in hand. For the reasons set out by the hon. Member for Maldon and East Chelmsford, it would be unthinkable for Ofcom to be outside the scope of the ombudsman.

Brian White (Labour, North East Milton Keynes)

Given that the review of the position of the ombudsman has been taking place for two years, can my hon. Friend assure me that it will be finished before the Bill is enacted?

Stephen Timms (Labour, East Ham)

I can certainly assure my hon. Friend that that will have happened before Ofcom is in operation by the end of the year. The answer to his question is yes.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am disappointed by the Minister's response. Although I am encouraged by the fact that he accepts the principle of my argument, he said that the Cabinet Office will deal with the matter. As the hon. Member for Milton Keynes, Northeast rightly pointed out, it is taking a long time.

Brian White (Labour, North East Milton Keynes)

I am talking not about a review of an individual component, but about a complete review of the ombudsman's functions, including removing the MP's filter and improving the way in which the ombudsman works in a collegiate form.

John Whittingdale (Conservative, Maldon and East Chelmsford)

That increases my concern, because the hon. Gentleman is saying that the review will be huge and that it will examine a host of areas. Surely, everyone, including the Minister, accepts the simple proposition that we have advanced. I accept that it is the Government's intention that Ofcom should be brought under the terms of the Parliamentary Commissioner for Administration, but we have offered a simple and easy method of achieving that straight away. All the Government have to do is to say, ''Yes'' to our amendment, and that will be it. We have made the life of the Cabinet Office easier by doing its work for it. I am not persuaded to withdraw the amendment, given that the Government accept the merit of our case.

Stephen Timms (Labour, East Ham)

The amendment is also valuable for whiling away a few minutes of the Committee's time. I understand that the exercise will be completed within two months, which is well before the period to which members of the Committee have drawn attention.

John Whittingdale (Conservative, Maldon and East Chelmsford)

If the Minister is giving me a guarantee that Ofcom will be brought within the remit of the Parliamentary Commission for Administration at least as fast as—if not faster than—the enactment of the Bill, I shall withdraw the amendment.

Stephen Timms (Labour, East Ham)

Yes.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I regard that as a triumph. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen Timms (Labour, East Ham)

I beg to move amendment No. 672, in

schedule 17, page 480, line 20, after '2003' insert 'and, in the case of a direction to a provider of a public electronic communications network, notwithstanding that it relates to him in a capacity other than as the provider of such a network.'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take the following:

Government amendments Nos. 673 and 674.

Stephen Timms (Labour, East Ham)

Paragraph 70 of schedule 17 deals with several minor and consequential amendments to update section 94 of the Telecommunications Act 1984, which currently gives the Secretary of State powers to serve directions on public telecommunications operators in the interests of national security or relations with a foreign Government. The updating of section 94 principally involves replacing the concept of public telecommunications operator, which has no direct equivalent in the new framework for the regulation of electronic communications. On reflection, we have reached the view that the amended provision under the Bill runs wider than is needed, in that those principally addressed are the providers of public electronic communications services. The existing power of direction is addressed principally to public telecommunications operators, a much smaller group.

We have therefore concluded that the scope of amended section 94 can be reduced, so that people with whom it is concerned are no more than the providers of public electronic communications networks. It is, however, necessary to ensure that a direction, while it may be addressed only to such a person, can apply to him in any capacity. That is consistent with the provisions of subsection (8) of section 94. We are narrowing the scope of the provision on the basis of further reflection. I hope that the Committee will consider that that is helpful.

Andrew Robathan (Conservative, Blaby)

I have no complaints about the amendments, but can the Minister tell us how many Government amendments have been accepted? On Second Reading, we were told that the Bill was just about perfect after being subject to scrutiny of the Joint Committee. I offer a wager that 100 amendments have been accepted. Can he tell how many have been?

Stephen Timms (Labour, East Ham)

Sadly, I am unable to tell the hon. Gentleman whether he will win the wager. I will make sure that he has such information by this afternoon's sitting.

Amendment agreed to.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Standing Committee E

Communications Bill

Roger Gale (Conservative, North Thanet)

Good afternoon. I have to report that the Programming Sub-Committee has met and agreed a variation on the timetable, which has to be put to the Committee. The Minister will explain the terms of the motion.

Kim Howells (Labour, Pontypridd)

I beg to move,Draft resolution of the programming sub-committee

Draft resolution of the programming

John Greenway (Conservative, Ryedale)

I rise simply to record our thanks to the Minister.

Question put and agreed to.

Schedule 17 - Minor and consequential amendments

Stephen Timms (Labour, East Ham)

I beg to move amendment No. 682, in

schedule 17, page 481, line 14, at end insert—

'74A In paragraph 18(2) of Schedule 2 to that Act (notices affixed to overhead apparatus), for ''paragraph 24(4)(a)'' there shall be substituted ''paragraph 24(2A)(a)''.'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to take the following:

Government amendments Nos. 683 and 684.

Stephen Timms (Labour, East Ham)

The amendments are further drafting corrections and I commend them to the Committee.

Andrew Robathan (Conservative, Blaby)

For the record, will the Minister tell the Committee the number of amendments to the Bill that have been agreed?

Stephen Timms (Labour, East Ham)

I am happy to pass on to the hon. Gentleman that the total by the end of the afternoon will be 134, which is on the right side of his wager target.

Roger Gale (Conservative, North Thanet)

It would be wholly inappropriate of the Chairman to tell the hon. Member for Blaby (Mr. Robathan) that, having won his wager, the drinks are on him.

Amendment agreed to.

Amendments made: No. 613, in

schedule 17, page 485, line 9, leave out 'section 322(3) of' and insert

'paragraph 18A of Schedule 12 to'.

No. 614, in

schedule 17, page 485, line 14, at end insert—

'(d) after paragraph (c) there shall be inserted—

''(d) section 322(3) of the Communications Act 2003.''.'.

No. 615, in

schedule 17, page 486, line 8, leave out 'section 322(3) of' and insert

'paragraph 18A of Schedule 12 to'.

No. 616, in

schedule 17, page 486, line 13, at end insert—

'(d) after paragraph (c) there shall be inserted—

''(d) section 322(3) of the Communications Act 2003.''.'.

—

No. 310, in

schedule 17, page 498, line 18, at end insert—

'( ) in subsection (2)(b), for ''the issue or renewal of the licence'' there shall be substituted ''the issue of the licence or the making of the grant'';'.

No. 311, in

schedule 17, page 498, line 20, leave out 'and'.

No. 312, in

schedule 17, page 498, line 22, at end insert

'and

( ) in subsection (5), at the end there shall be inserted ''or any grant of recognised spectrum access made in accordance with regulations under section 3A''.'.—[Mr. Timms.]

Stephen Timms (Labour, East Ham)

I beg to move amendment No. 667, in

schedule 17, page 504, line 15, at end insert—

'() After paragraph 14(3) (executive committees of OFCOM to include member or employee of OFCOM) there shall be inserted—

''(3A) Subparagraph (3) has effect in the case of a committee of OFCOM which—

(a) is not the Content Board, but

(b) has functions that are confined to functions falling within section 12(2) of the Communications Act 2003 (functions within the Content Board's remit),

as if the reference in that subparagraph to a member of OFCOM included a reference to a member of the Content Board who is not a member of OFCOM.'' '.

As my hon. Friend the Minister for Tourism, Film and Broadcasting explained to the Committee on 12 December 2002, Lord Currie, the chairman of Ofcom, seeks flexibility for the internal structure within which Ofcom exercises its functions. The purpose of the amendment is to deliver that flexibility. We examined other models for regulators, in particular, we noted the benefits that the Financial Services Authority found in organising itself in different ways to reflect changes in business models in its sector.

One of the principal content functions of Ofcom will be consideration of complaints of unfairness and unwarranted infringement of privacy, which are currently the responsibility of the Broadcasting Standards Commission, can be a time-consuming task. To guard against that absorbing too great a proportion of the content board's time, Lord Currie and Richard Hooper, who is to chair the content board, have asked that it should be possible to establish a committee of Ofcom to make determinations on such complaints. On that committee will be a member of the content board who is not necessarily a member of the Ofcom board. Officials of Ofcom need not undertake the making of determinations on the complaints.

The amendment will therefore give Ofcom a little more flexibility in deciding how to organise those matters. The amendment provides that content matters can be determined by a committee of Ofcom that contains at least one member of the content board, all of whom are appointed by Ofcom in any case. I hope that the Committee feels that the amendment is helpful.

Amendment agreed to.

Question proposed, That this schedule, as amended, be the Seventeenth schedule to the Bill.

Andrew Lansley (Conservative, South Cambridgeshire)

I will not trespass out of good order by rehearsing a previous debate, but I want it to be noted that the question of whether Ofcom should have the ability to charge for grants of recognised spectrum access in excess of the costs arises under paragraph 145. It was the subject of my amendment No. 305, which we

debated in an earlier group of amendments.

I want to reiterate my view, which derives also from the consideration of the Bill by the Select Committee on Trade and Industry. If recognised spectrum access is to be proceeded with, we have seen nothing to persuade us that it is desirable that there be an ability to charge beyond costs for RSA. We should at least establish whether RSA has benefits in the eyes of industry—whether they want to acquire it—before we start charging them in excess of what Ofcom would have to pay to provide it.

Stephen Timms (Labour, East Ham)

As the hon. Gentleman says, this discussion refers back to an earlier debate. We have taken the view that charges for RSA should be on a par with charges made to other spectrum users. That is the basis on which the arrangements have been developed, and I believe that time will demonstrate that we have adopted the right approach.

Question put and agreed to.

Schedule 17, as amended, agreed to.

Schedule 18 - Transitional provisions

Andrew Robathan (Conservative, Blaby)

I beg to move amendment No. 652, in

schedule 18, page 506, line 22, after 'agreement', insert

'or licence granted under any enactment, deed or other legally enforceable arrangement (''the agreement'')'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following:

Amendment No. 653, in

schedule 18, page 506, line 24, leave out 'provides'.

Amendment No. 654, in

schedule 18, page 506, line 25, after '(a)', insert 'provides'.

Amendment No. 655, in

schedule 18, page 506, line 26, after '(b)', insert 'provides'.

Amendment No. 656, in

schedule 18, page 506, line 28, at end insert

'or refers to any relevant licence.'.

Amendment No. 657, in

schedule 18, page 506, line 41, at end insert—

'(3A) Reference to any relevant licence in any agreement shall be construed as including references to any notification made pursuant to section 29 of this Act, any approval of OFCOM or activity which is otherwise authorised or permitted under this Act and accordingly the repeal of section 7 of the Telecommunications Act 1984 shall not, of itself, have any effect on any such agreements, deeds or arrangements.'.

Andrew Robathan (Conservative, Blaby)

We are entering the home straight, but a lot remains to be covered and much of it is important, so I will not discuss these amendments at length.

The amendments are designed to ensure that existing third-party contractual arrangements are unaffected by the withdrawal of the licensing regime. We believe that to be the Government's intention, but we think that they should slightly broaden the provision that to ensure that any relevant licences are included.

Paragraph 3 to schedule 18 sets out agreements that cease to have effect or are capable of being terminated if a party to the agreement ceases to hold the relevant licence. It provides that such agreements are not to cease to have effect or be capable of being terminated as a result of the abolition of licences by the Bill. Paragraph 6.3.2 of the draft Communications Bill policy document of May 2002 states that the types of agreement that might be affected by the abolition of the licensing regime should be made available: they include wayleave and interconnection agreements. That reflects the Government's intention that

''the parties to these agreements etc. should be left in the same position despite the abolition of the licences and obligations.''

United Kingdom mobile operators support the Government's intention, but believe that they do not go far enough. These amendments would strengthen this aspect of the Bill by extending the provisions to all agreements, rather than just relevant licences, such as those issued under the Wireless Telegraphy Acts. The mobile operators have entered into a wide variety of agreements across their businesses, which relate to—among other things—network infrastructure, including masts and base stations. In relation to interconnection with other telecommunication networks, they have entered into agreements with suppliers and customers that make reference to or are otherwise somehow dependent on their holding a licence under the Telecommunications Act 1984.

It is not merely a matter of some agreements being terminatable—perhaps terminable is the correct word—if a licence ceases to exist. Warranties are often given in respect of an operator having such a licence that might be breached by the withdrawal of the licensing regime. A wide range of agreements is affected by the withdrawal of the licence regime, but the risks of inadvertently interfering with existing contractual arrangements can be dealt with if the transitional agreements in the paragraph are amended to include arrangements that are sufficiently widely drafted. While the amendments might not be perfect, we hope that the Government will at least provide adequate assurance to operators that the transitional provisions will include all agreements and all licences.

Stephen Timms (Labour, East Ham)

I understand the concern that has given rise to the amendments. As the hon. Member for Blaby said, there are agreements in place that are dependent on a licence being held. When those agreements were put in place, it was never envisaged that the licensing arrangements would be abolished, so we must take care in making such a fundamental change that we do not inadvertently cause difficulties. I sympathise with that concern—indeed, so that effective transitional provisions were drafted, we made a point of asking for information about such agreements when we published the draft Bill in May. However, the amendments do not provide an effective approach to the issue.

Proposed new sub-paragraph (3A) might have some limited effect, but we cannot support it because it leaves matters too uncertain. It proposes to construe any reference in any agreement to a relevant licence—including various items under the regulatory regime established under the Bill, such as a notification made

under clause 29—in such a way that the abolition of telecoms licences would have no effect on those matters. Given that the intention is that current telecoms licences will be abolished and replaced by the regulatory regime in part 2, we think it unlikely that the abolition of the licences could have any effect on such matters.

The only conceivable situation in which a problem might arise is in the context of conditions contained in telecommunications licences that are saved in accordance with other provisions in the schedule. However, each of those provisions already deals with and is linked to the new regulatory regime, so we can see no reason why the amendment would be necessary in that context.

I think that I can give the hon. Gentleman the assurance that he was seeking. We are sympathetic to the concerns about agreements that are conditional on licensing. In paragraph 3, we have made the provision that we think appropriate and necessary: it deals with everything of which we are aware that might present difficulties in this context. We would be prepared to consider further provisions if those who are concerned—the hon. Gentleman referred to mobile operators and there may be others—provided information about specific problems that could be dealt with by such means, but such information must be provided quickly if we are to have an opportunity to make use of it during the remaining stages of the Bill. I hope that that offer is helpful.

As far as my officials and I are aware, the Bill as drafted deals with all the problems that might arise. If there are concerns, we would like to know the details.

Andrew Robathan (Conservative, Blaby)

I trust that the mobile operators have heard what the Minister said—I shall make sure that they do—because they are the ones who raised that issue. I had hoped that this would be number 136, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen Timms (Labour, East Ham)

I beg to move amendment No. 273, in

schedule 18, page 508, line 15, leave out '17' and insert '16'.

This is another amendment correcting a very minor error in the text of the Bill. The reference is to article 17 of the universal service directive; it should be to article 16.

Amendment agreed to.

John Greenway (Conservative, Ryedale)

I beg to move amendment No. 687, in

schedule 18, page 508, line 30, at end insert

'but a condition referred to in subparagraph (2)(a) shall remain in force only in relation to the market identified under subparagraph (4)(b), and a condition referred to in subparagraph (2)(b) shall remain in force only in relation to the market identified under subparagraph (4)(a)'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following:

Amendment No. 688, in

schedule 18, page 508, line 39, at end insert

'or they have determined not to apply any SMP conditions to that person by reference to that market'.

Amendment No. 689, in

schedule 18, page 509, line 4, at end insert—

'(10) Immediately after the giving of a continuation notice by virtue of subparagraph (2)(b), OFCOM shall commence, and as expeditiously as reasonably practicable conclude, an analysis of the market referred to in subparagraph (4)(b), and shall determine whether or not to set SMP conditions under section 89 in relation to that market.'.

Amendment No. 690, in

schedule 18, page 514, line 4, leave out from 'they' to end of line 6 and insert

'or the Director have, prior to the giving of the notice, identified the relevant market to which the direction relates for the purpose of making a market power determination.'.

Amendment No. 691, in

schedule 18, page 514, line 9, at end insert—

'(6) A direction referred to in subparagraph (4) shall cease to have effect on the date on which any SMP conditions which relate to the relevant market to which the direction relates and which the Director or OFCOM have determined to apply come into effect, or on the date on which the Director or OFCOM determine not to apply any such conditions in relation to that market.'.

John Greenway (Conservative, Ryedale)

Throughout our sittings, we have had to address some extremely technical issues that are as dry as dust. I am afraid that these amendments fall into the same category, but they are extremely important none the less. I am sure that the Minister has been well briefed and we look forward to his answer.

Amendment No. 687 would ensure that when Ofcom gives continuation notices to roll forward existing regulation, the continuing regulation is applied only to the market or markets identified by Ofcom in the notices, and to no greater extent than that justifies. Paragraph 6(2) and (4) enables Ofcom simply to roll forward existing regulation of apparatus supply without any requirement for judgment or analysis of the extent to which existing regulation is relevant or properly targeted. Ofcom may do that by forming a view that existing conditions have the purpose of regulating an apparatus market or markets identified in the continuation notice without carrying out a significant market power analysis. However, the existing conditions may cover a wider market or markets than those that Ofcom identifies as intended to be regulated. The sub-paragraphs allow conditions to continue to be applied to the wider market or markets not identified by Ofcom. They do not confine the continuing effect of the conditions to the market or markets that Ofcom has identified.

Ofcom has a duty to comply with good regulatory principles, and especially to ensure that regulation is justified and well targeted. The amendment would assist Ofcom in that process and prevent the possibility that it could side-step its duties to comply with those principles and good practice, whether by design or default.

Amendment No. 688 would ensure that Ofcom is required to give notice with the effect of ceasing the application of existing licence conditions if it has analysed a specific market and decided not to apply

significant market power conditions. Under paragraph 6(6), existing licence conditions cease to have effect if Ofcom gives notice to the licensee. Under paragraph 6(7), it must give such a notice if it has analysed the relevant market and determined whether to apply SMP conditions, and if those conditions have come into force. However, nothing in the Bill says what would happen if Ofcom analysed a specific market and decided not to apply SMP conditions because, for example, it concluded that the market was competitive. The notice that Ofcom is required to give under paragraph 6(6) that would cause existing licence conditions to cease to have effect would not cover that situation.

Under the regime introduced by the European Union directives that the Bill implements, significant market power should be regulated ex ante by SMP conditions, or not regulated at all. If Ofcom decides not to apply SMP conditions, there can be no justification for continuing any ex ante regulation of the market concerned. This important amendment would close that loophole by providing that Ofcom must give notice to discontinue the effect of an existing condition if it determines not to apply SMP conditions to a market. Without the amendment, some markets could continue to be regulated after Ofcom had decided that there was no requirement for SMP conditions to be applied. Not only would that go completely against the grain of each element of good regulation, but it would potentially be highly damaging to a competitive market.

Amendment No. 689, like amendment No. 690, is consequential on amendment No. 688 being agreed. It would oblige Ofcom to carry out a market review consistent with clause 89 within a reasonable time after giving a continuation notice in relation to apparatus, and to decide whether to make SMP apparatus conditions. Under paragraph 6, a continuation notice served by Ofcom relating to conditions that regulate apparatus can continue in force indefinitely, thus perpetuating regulation of apparatus supply under an existing licence. That is regardless of whether a person has SMP in an apparatus market and without an obligation on the part of Ofcom to undertake a market analysis to determine whether SMP exists in relation to an apparatus market.

Furthermore, it is fundamental to the changes required by the EU directive that licences are abolished and replaced by the general authorisation. Logically, it is absurd to maintain in place a licence to run telecommunications systems, which is what the existing licences are for, for the purposes of regulating the supply of apparatus. It is also discriminatory so to do, because only an apparatus supplier who is a licensee can be regulated in that way.

Regulation of apparatus should be based on the existence of significant market power in a relevant apparatus market. There is no justification for continuing the old-style licence regulation of apparatus supply for anything other than the shortest possible period while the market review is carried out. Ofcom must be obliged, as it is in the case of electronic communication services, to undertake the market analyses to determine whether any person has

SMP in an apparatus market in respect of which a continuation notice has effect. If Ofcom determines to apply SMP conditions in respect of an apparatus market or, if amendment No. 688 is agreed, Ofcom determines not to apply SMP conditions, it will be required to serve a notice under sub-paragraph (7) ceasing the continuation notice. Apparatus supply can then be properly regulated, but only on the basis of significant market power in a particular apparatus market. Regulation in any other way post-Royal Assent to the Bill is unnecessary and undesirable.

I turn now to amendment No. 690. Paragraph 17 of the schedule enables Ofcom to continue in force directions under the Telecommunications (Interconnection) Regulations 1997, when it considers it appropriate to do so. I am sure that the Committee will be familiar with those regulations. Under the new regulatory regime, economic regulation is intended to be carried out only on the basis of market analysis and SMP determinations—a point to which I have drawn attention when speaking to the other amendments. The amendment would link the continuing effect of such directions to the SMP process by limiting the power to maintain existing directions in force to markets that have been identified for the purpose of making market power determinations.

Under amendment No. 691, the directions will cease to have effect, either when SMP conditions made by Ofcom come into force or when Ofcom decides not to make SMP conditions. The amendment would provide a mechanism for bringing directions from the previous regulatory regime, continued in force under paragraph 17(4), to an end when the director of Ofcom has carried out market analyses of the relevant markets and has determined whether or not to apply SMP conditions.

Under the Telecommunications (Interconnection) Regulations 1997, which I have already mentioned, the Director General of Telecommunications has power to issue directions to resolve interconnection disputes. He has exercised that power on several occasions, including, for example in relation to flat-rate internet access and partial private circuits.

Paragraph 17(4) enables Ofcom to continue the old regime directions that are in force if it decides that it is appropriate to do so. Surely, in principle, the old regime regulations should be brought to an end, but in relation to the directions, there is no mechanism in the Bill for achieving that. Such directions relate to matters which, if they are to be regulated, should be regulated by SMP conditions made as a result of SMP determinations following market analysis, and not on the basis of the regulatory regime that went before.

The amendments would ensure that, once the Bill has received Royal Assent and the new provisions have come into force, there would be no overhang from the continuing regulation of the markets for Ofcom, as that would be entirely inappropriate, and more to the point, unnecessary in relation to the United Kingdom Government complying with the EU directives, which is what the schedule and other clauses seek to achieve.

Stephen Timms (Labour, East Ham)

Few days have been allowed to pass in Committee without some discussion of the regulation of apparatus markets. Hon. Members are, I am sure, heartened to know that today is no exception. I am only disappointed that the hon. Member for Ryedale (Mr. Greenway) did not remind us of the hard-wired telephone that he has at home.

We have said on several occasions that the need for apparatus regulation is diminishing, but we do not think that it has yet disappeared, particularly as regards hard-wired telephones. I have already said that I accept that the existing provisions run somewhat too wide and, as the Committee knows, I propose to table amendments on Report specifically to reduce the scope of the definition of apparatus for those purposes.

I would like to consider further and reflect on amendment No. 687, which is equally helpful. It would limit the scope of continuation notices that may be made by Ofcom. The existing licence condition, which is continued in effect by the notice, would then have effect only in a market identified for the purpose of the continuation notice. The hon. Gentleman is on to something there. I shall consider the matter further and will, if appropriate, table an amendment on Report.

Amendment No. 689 would introduce something entirely new and, again, I think that it is rather helpful. The amendment would require Ofcom, after continuing any existing licence condition relating to apparatus, to conduct a review of the relevant market to establish whether there is a person with significant market power in the market. It is, of course, a requirement of the directive that such a review should take place as early as is practicable in relation to services markets. I am confident that Ofcom would in any case carry out a similar review in relation to any apparatus markets, even without an explicit obligation to do so, but it seems entirely reasonable, given the provision for service markets, to state that explicitly in the Bill. I undertake to consider that proposal and table an appropriate amendment on Report.

I have more difficulty with amendments Nos. 690 and 691. They relate to another kind of transitional provision that allows for the continuation of directions made under the interconnection regulations. Those would be existing directions made within the current framework that could, for example, specify issues that must be covered in an interconnection agreement. The amendments would relate those directions to a specific market, either before the directions were continued, or so that they could terminate when the market had been reviewed and appropriate SMP conditions had been imposed. However, directions made under regulation 6 are not related to markets because they relate to interconnection between public operators who do not necessarily have market power at all—by definition, most do not. I suggest therefore that the concept of trying to relate the obligation to a relevant market does not work in this case. Amendment No. 691 is consequential on amendment No. 690 and I shall resist it on the same grounds.

The effect of amendment No. 688 is fully contained in paragraph 6(7) and, especially, in sub-paragraph (7)(b).

I am grateful to the hon. Member for Ryedale and I shall look again at amendments Nos. 687 and 689, which would give a sharper focus to the provisions. I shall table appropriate amendments on Report and I hope that he will withdraw the amendment.

Finally, let me sum up my concern about amendments Nos. 690 and 691. The hon. Gentleman's case was right in respect of SMP conditions, but access-related conditions are not necessarily dependent on market analyses.

John Greenway (Conservative, Ryedale)

When I get home this evening my wife will ask me what sort of a day I had. I will tell her that the Minister more or less accepted two of my amendments, but when she asks me what they were about, I shall say that I have not got the faintest idea—[Laughter.] Fortunately, the Hansard reporters will have recorded every word and we will be able to read the report and learn from that.

I am genuinely grateful to the Minister. We can joke about the complexity of the subject—in fact, when I was reading through my speaking notes, I said to my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale), ''Well, we're back to the linguini again''—because the issues are complicated. However, they are of considerable concern to the relevant businesses and customers of the businesses—that includes all of us.

I am grateful to the Minister for reminding me that I must do something about the telephone that I rent. Owing to the way in which he responded, the promise that he will reflect on the amendments, and the hope that he will table welcome amendments on Report, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen Timms (Labour, East Ham)

I beg to move amendment No. 669, in

schedule 18, page 510, line 1, leave out 'requiring compliance by a' and insert

'of a licence under section 7 of the 1984 Act requiring compliance by the'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following:

Government amendments Nos. 670 and 671.

Stephen Timms (Labour, East Ham)

We need to make provisions so that Ofcom can continue to resolve under rules currently applying to the telecommunications interconnection regime dispute cases that arise but are not determined before the introduction of the new disputes regime that is set out in chapter 3 of part 2. The amendments will allow that.

I shall be happy to give the Committee further details, but I might have said sufficient for hon. Members to think that the amendments are desirable.

Amendment agreed to.

Amendments made: No. 670, in

schedule 18, page 513, line 37, after 'Act', insert

'(except sections 184 and 185)'.

No. 671, in

schedule 18, page 513, line 39, at end insert—

'( ) Where OFCOM make a determination for resolving a dispute falling to be resolved in accordance with subparagraph (1)—

(a) their powers on making that determination are to be those which would have been exercisable by the Director under those regulations (instead of those under Chapter 3 of Part 2);

(b) conditions of a licence under section 7 of the 1984 Act requiring compliance with directions given by the Director under regulation 6 of those regulations are to continue to have effect as if they also applied to directions given by OFCOM by virtue of paragraph (a); and

(c) paragraph 9 of this Schedule has effect as if the reference in subparagraph (1)(d) to directions given by the Director under that regulation included a reference to directions given by OFCOM by virtue of paragraph (a) of this subparagraph.'.

No. 445, in

schedule 18, page 521, line 7, at end insert—

'Applications for extension of pretransfer licences{**qc**}

41A (1) Section 247(2B)(a) does not prevent the determination by OFCOM of a day falling less than one year after the making of the determination where—

(a) OFCOM consider that the day by which they would need to publish a notice is a day which is not more than 15 months after the commencement date; and

(b) the determination of that day is made as soon as practicable after the commencement date.

(2) Where the day determined by OFCOM for the purposes of paragraph (b) of section 247(2A) is a day in the period of three months beginning with the day after the determination, that paragraph shall have effect as if for the words ''three months before'' there were substituted ''on''.

(3) In this paragraph, the ''commencement date'' is the date on which section 247 comes into force.

Applications for renewal of licences under 1990 Act and 1996 Act{**qc**}

41B (1) A provision set out in subparagraph (2) does not prevent the determination by OFCOM of a date falling less than one year after the making of the determination where—

(a) OFCOM consider that the relevant date for the purposes of the section in question is a date which is not more than 15 months after the commencement date; and

(b) the determination of the relevant date is made as soon as practicable after the commencement date.

(2) Those provisions are—

(a) section 53(12) of the 1990 Act;

(b) section 103A(12) of the 1990 Act;

(c) section 104A(14) of the 1990 Act;

(d) section 16(12A) of the 1996 Act;

(e) section 58(12A) of the 1996 Act.

(3) An application which is made before the commencement date in accordance with a provision set out in subparagraph (5) shall be treated after that date as if it had been made in accordance with that provision as amended by this Act.

(4) Where, in a case where a provision set out in subparagraph (5) applies, the relevant date for the purposes of the section in question is a date in the period of three months beginning with—

(a) the commencement date, or

(b) the day after the day on which the relevant date is determined,

that provision shall have effect as if the words ''the day falling three months before'' were omitted.

(5) Those provisions are—

(a) section 53(2) of the 1990 Act;

(b) section 103A(2) of the 1990 Act;

(c) section 104A(3) of the 1990 Act;

(d) section 16(3) of the 1996 Act;

(e) section 58(3) of the 1996 Act.

(6) In this paragraph, the ''commencement date'', in relation to any provision set out in subparagraph (2) or (5) is the date on which the provision of Schedule 15 inserting or amending that provision comes into force.'.—[Mr. Timms.]

Schedule 18, as amended, agreed to.

Schedule 19 - Repeals

Stephen Timms (Labour, East Ham)

I beg to move amendment No. 381, in

schedule 19, page 527, leave out lines 37 to 39.

The amendment corrects a minor error in the schedule that provides for the repeal of an entry in part 3 of schedule 1 of the House of Commons Disqualification Act 1975, which relates to

''a Director of the successor company within the meaning of Part 5 of the Telecommunications Act 1984.''

That entry has already been repealed by another instrument, so we do not need to make provision for its repeal in the Bill.

Amendment agreed to.

Amendments made: No. 683, in

schedule 19, page 529, line 29, column 2, at end insert—

'( ) in paragraph 9(2), the words ''section 11(1) of this Act,'';'.

No. 684, in

schedule 19, page 529, line 32, column 2, at end insert—

'( ) in paragraph 27(1), the words ''section 109(2) or (3) of or''.'.

No. 617, in

schedule 19, page 530, line 20, column 2, at beginning insert—

'In section 69(2), the word ''or'' at the end of paragraph (b).

In Schedule 2, the word ''or'' at the end of paragraph 17(2)(b).'.

No. 446, in

schedule 19, page 531, line 19, column 2, at end insert—

'In section 53(4), the words ''before the relevant date''.'.

No. 447, in

schedule 19, page 532, line 6, column 2, after 'subsection (3),', insert

'the words ''before the relevant date'','.

No. 448, in

schedule 19, page 532, line 7, column 2, at end insert—

'(aa) in subsection (8), the words from ''(whether because'' to ''any other reason)'';'.

No. 449, in

schedule 19, page 535, line 18, column 2, at end insert—

'In section 16(6), the words ''before the relevant date''.'.

No. 450, in

schedule 19, page 535, line 39, column 2, leave out 'Section 58(5).' and insert—

'In section 58—

(a) subsection (5);

(b) in subsection (6), the words ''before the relevant date''.'.—[Mr. Timms.]

Schedule 19, as amended, agreed to.

Clause 392 ordered to stand part of the Bill.

Clause 393 - Transitional provision for anticipatory carrying out of functions

John Greenway (Conservative, Ryedale)

I beg to move amendment No. 692, in

clause 393, page 336, line 23, at end insert

'and where in pursuance of such an order under section 395 any such function as is referred to in subparagraph (a) is carried out by the Director-General of Telecommunications or the Secretary of State, references in section 187 to OFCOM shall in relation to anything referred to in that section have effect as if they were references to the Director General of Telecommunications or the Secretary of State as the case may be.'.

It gives me great pleasure to move the final amendment to be debated in Committee. I hope that the run of success that we have had today will continue in respect of this amendment, because it relates to an important issue.

Andrew Robathan (Conservative, Blaby)

Does my hon. Friend understand this one?

John Greenway (Conservative, Ryedale)

I do. I understood the other one, but whether I can remember what I said by tonight is another matter.

The clause provides for certain Ofcom functions to be carried out by the Director General of Telecommunications or the Secretary of State during a transitional period following the completion of the passage of the Bill. By virtue of clause 187, decisions that would be made by Ofcom under part 2 and certain other decisions can be appealed against to the Competition Appeals Tribunal. It is therefore right in principle that decisions that are made during that transitional period, which could be appealed against if they were made by Ofcom, should be appealable if they were made by the director general or the Secretary of State. Indeed, the framework directive requires that decisions made by the national regulatory authority after 25 July this year—the implementation date for the directive—should be appealable.

The amendment seeks to close the loophole by providing that references to Ofcom in clause 187 should be considered—in relation to decisions made during the transitional period—as references to the director general or Secretary of State. I therefore ask the Minister to close the loophole in the interests of fairness and consistency. He must ensure that the requirements of the framework directive with regard to appeals are properly implemented and that the requirements are not imperilled by the Bill's receiving Royal Assent by 25 July.

Stephen Timms (Labour, East Ham)

The hon. Gentleman is on a roll this afternoon. [Hon. Members: ''Oh!''] The Committee will be aware that we do not expect Ofcom to be in a position to take on all its functions as early as 25 July 2003, which is the date by which the EC directive should be given effect. The clause allows those functions of Ofcom to be carried out by Oftel or the Radiocommunications Agency until Ofcom is ready to assume them.

In drafting the clause we attempted to avoid specifying which provisions, other than those defined in subsections (7) and (8), were to be brought into force. We think that the general wording of subsections (1) to (3) delivers what the amendment seeks to achieve, but I understand the hon. Gentleman's concern that it is not as clear as it might be. The intention is that decisions of Oftel and of the Radiocommunications Agency should be subject to appeal under clause 187 during the transitional period, as Ofcom's decisions will be subsequently. If the hon. Gentleman will withdraw the amendment, I will certainly consider whether we need something along those lines. I am happy that we are able to conclude our consideration of the amendments in Committee on such a harmonious note.

John Greenway (Conservative, Ryedale)

I might add as a final comment that I remember similar blandishments being offered to the Opposition in respect of amendments that might be made during the closing stages of consideration of the Freedom of Information Bill, with which I was fortunate enough to deal for the Conservatives. Sadly, as we know, much of the Freedom of Information Act 2000 has not yet been brought into force, but I hope that, despite what the Minister says, the delay in implementing the requirements of the directive will not be too long, and that this is only a transitional period.

The Minister says that he will consider the amendment, and I am sure that he will. He will agree that it is vital that the rights of appeal, which are very important to the organisations concerned, are properly enshrined in the Bill. In light of what he has said, I shall gladly beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 393 ordered to stand part of the Bill.

Clauses 394 and 395 ordered to stand part of the Bill.

New clause 28 - Meaning of 'initial expiry date'

New clause 38 - Code relating to programme commissioning

New clause 39 - Changes of control of Channel 5

New clause 40 - Action following review under s.

New clause 17 - Irish language television programmes

Simon Thomas (Plaid Cymru, Ceredigion)

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

I am pleased that, in our 26th sitting, we have at last come to the only new clause that I have tabled, although I have of course tabled amendments. I have waited not only 26 sittings, but 20 years to do so. Some 20 years ago, I was at university, constructively employed—unlike the Government Whip, who clearly has other things to do—in studying the Irish language. At the time, I thought that I was doing that out of intellectual curiosity and to find out a little more about folk music—but I will not mention folk music again in front of the Minister because I do not want to lose his sympathy so early in this debate. Twenty years later, I have an opportunity to take more account of what has been happening in Ireland during that period.

Use of the Irish language has grown, and the Bill enables us to implement some important provisions of the Belfast agreement that have yet to be brought into effect. We have an opportunity to think for a few minutes about how we might improve the Bill to ensure better provision for Irish-language broadcasting in Northern Ireland. If we do that, we will make our own small contribution to the long peace process in that part of Ireland.

Mark Hoban (Conservative, Fareham)

Will the hon. Gentleman confirm what he means by Irish language? Is he talking about Ulster-Scots Gaelic or Irish Gaelic?

Simon Thomas (Plaid Cymru, Ceredigion)

I do not know how much of a lecture the hon. Gentleman wants on the history of the Irish language. [Interruption.] A two-hour lecture? Very well.

I studied Irish for only one year, when I was at university. I studied Donegal Irish, which is the Irish of Northern Ireland. It is very close to Scots Gaelic; the two dialects are about 70 or 80 per cent. interchangeable, and the level of understanding between two speakers can be even better than that if they speak very slowly—or after several whiskeys.

In Wales, the dialect that was spoken in my valley has almost died out, but that has not stopped a third of parents in the valley from giving their children a Welsh-language education. That is the important thing. Those children are learning a more standard form of Welsh, not the local dialect as such, but they are participating in a bilingual Wales none the less.

The same thing has happened in the growth in the use of the Irish language. It has moved out from the west, where it was isolated, and into the cities, including Belfast. Use of the Irish language has taken off in Dublin—especially on some of its poorer estates—as the Select Committee on Welsh Affairs saw when it went to Dublin a year ago. Parents have taken it up as an important part of the education of their children—[Interruption.]

Roger Gale (Conservative, North Thanet)

Order. I appreciate that we are nearing the end of the Committee, but there is a lot of noise and we still have much work to do.

Simon Thomas (Plaid Cymru, Ceredigion)

Thank you, Mr. Gale. The growth in the language is a part of a renaissance of awareness on the part of people from all parts of Ireland that they have a common heritage, that they can share in that heritage no matter what their political background, and that the Belfast agreement enables them to make provision for that heritage to be available to everyone in all parts of the island of Ireland. That is the important point. It does not really matter whether the Irish that is being taught is the Irish that was spoken in Belfast 200 years ago.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I will assist the hon. Gentleman, as I, too, encountered these subjects during the course of my studies. A long time ago the Celtic language branched into P Celtic and Q Celtic. Scots Gaelic and Irish Gaelic are both in the Q Celtic family, and P Celtic transformed into the Welsh and British Celtic languages, so they are very similar.

Simon Thomas (Plaid Cymru, Ceredigion)

I am grateful to the hon. Gentleman. I understand that he studied Celtic, so he knows a lot about these things. To avoid any confusion, it is worth saying that a Welsh and Irish speaker would not find each other mutually understandable.

Mark Hoban (Conservative, Fareham)

I am sorry to appear to be a pedant, but in yesterday's Northern Ireland questions a query was raised about Ulster Scots Gaelic being one language and Irish Gaelic being another. Which Irish language is the hon. Gentleman going to promote with the fund he proposes?

Simon Thomas (Plaid Cymru, Ceredigion)

The hon. Gentleman would have to do the three years of Celtic study that the hon. Member for Sheffield, Hallam (Mr. Allan) did, or even the one year that I did at university, to understand the range of Irish/Gaelic speaking that exists from the very southern part of Ireland to the highlands of Scotland.

There is a range of dialects. The two dialects at the far ends of that range are not really mutually comprehensible, but as soon as one moves towards the middle of the range one finds dialects that are fairly mutually comprehensible. For example, a Scots Gaelic soap opera has been shown in Ireland, and it is comprehensible to most Irish speakers. Over the past 100 years, Irish has become standardised and because of education and standardisation, dialects that were once fairly mutually incomprehensible throughout the island of Ireland are now more widely comprehensible. If the hon. Member for Fareham (Mr. Hoban) is really interested in the subject, he should go to the Isle of Man, which is right in the middle. There he will find the two dialects coming together in Manx, which is a

combination of both Scots Gaelic and the Irish language. He must understand that we are talking about a range of dialects that have diverged into two languages and that they remain important in Ireland in political and cultural terms.

Michael Fabricant (Conservative, Lichfield)

I have great sympathy with what the hon. Gentleman is saying. The first Bill Committee on which I served was on the Welsh Language Bill in the 1992 to 1997 Parliament. I appreciate and follow his reasoning that if the provisions he proposes were adopted, the speaking of Irish Gaelic would be encouraged. Although this might be a chicken-and-egg question, to get the matter in context it would be helpful to know how many people—either in total or as a percentage—in Northern Ireland he estimates have Irish Gaelic as a primary or secondary tongue.

Simon Thomas (Plaid Cymru, Ceredigion)

I am delighted by that intervention because it takes me back to the new clause. The answer is 167,000 people, or 10.35 per cent., of the Northern Ireland population, as published in the 2001 census, the results of which have been available for about three weeks. Those figures reveal an increase of 10 per cent. in 10 years.

I suggest to the hon. Gentleman and other Committee members that that increase is a direct result of the further provision of education in the Irish language in Northern Ireland. Young people comprise much of that figure, and although not all of them are first-language Irish speakers, it should be emphasised that they have a significant knowledge of Irish and have been educated, at least in part, through the medium of Irish. Those statistics reflect an interesting change in the pattern of Irish speaking. As the Gaeltachtaí—the protected Irish language areas in the Republic of Ireland—have become weaker, there has been an upsurge of interest in Irish in other parts of Ireland.

My new clause would establish an Irish language television committee—a Coiste Teilifise Gaeilge—with members from the interested bodies in Northern Ireland. Those are as follows: Foras na Gaeilge, or the Irish Language Agency; the Ultach trust, which looks after, supports and promotes the Irish language; Teilifis na Gaeilge, the Republic's Irish language broadcaster—the S4C of the Republic; and the Northern Ireland Film and Television Commission. I should emphasise that Foras na Gaeilge, a cross-border language body, was set up under the Belfast agreement and is funded by the Republic of Ireland and the British Parliament.

In addition to the increase in Irish speaking in Northern Ireland, there was a good response to the consultation on the Bill. The Government consultation document, ''A New Future for Communications'', included a provision on Irish-language broadcasting in Northern Ireland. There were 300 responses to the consultation generally, but 590 postcard responses from supporters of Irish language broadcasting in Northern Ireland—outnumbering two to one the responses to the Bill overall. I suspect that there was a little campaign going on, but that is part of the

democratic process. It is good to see people organising to get what they want.

Andrew Robathan (Conservative, Blaby)

Did I just hear the hon. Gentleman say that there were 590 responses in favour of Irish-language broadcasting? I doubt that he would consider that to be statistically significant, any more than the rest of the Committee would.

Simon Thomas (Plaid Cymru, Ceredigion)

I strongly disagree with the hon. Gentleman. It is statistically significant, because there were only 300 other responses to the consultation. Almost 600 people were prepared to respond in respect of the Irish language, and there were only 300 other responses relating to all the things that we have spent the past 25 sittings debating. That tells us something about what people in Northern Ireland are saying about access to Irish-language broadcasting.

The new clause fits in well with the overall structure of the Bill. We have talked previously about how the Bill enshrines cultural diversity, particularly in relation to the Gaelic Media Service and S4C. As I have said before, the Government can point to S4C and the Gaelic Media Service and say that they have done what they said they would do for cultural diversity in the United Kingdom. It is good that they can point to the enshrinement in the Bill of the ongoing standing of those broadcasters.

When the Secretary of State introduced the Bill to Parliament, she said:

''communications is about much more than economics. The Bill deals with the means by which our society speaks to itself and, as it were, hears the echo. It is the means by which we talk to the world. It is a shaper of our culture, our identity and our values.''—[Official Report, 3 December 2002; Vol. 395, c. 782.]

For a significant number of people in Northern Ireland, the Irish language is a shaper of their culture, identity and values. I accept that is not true for everyone. None the less, the Irish language is an important element of society in Northern Ireland.

The new clause actually refers to a treaty obligation that the Government have entered into to provide for Irish-language broadcasting in Northern Ireland. Although the new clause might be resisted on several grounds, it cannot be resisted on the grounds that the Government cannot undertake to set up an Irish-language production fund, as they have a treaty obligation with the Irish Republic to do that. The Belfast agreement includes a British Government commitment to

''seek more effective ways to provide financial support for Irish language film and television production in Northern Ireland''

and—although it is not covered by my new clause—to

''provide more extensive access in Northern Ireland for TG4'',

which is the Republic's Irish language broadcaster, Teilifis na Gaeilge.

That commitment was reiterated in the White Paper published in December 2000. It stated that, as the Committee has learned:

''Irish language broadcasting in Northern Ireland is less developed than Celtic language broadcasting in Scotland and Wales.''

It continues:

''The Government has made several commitments in the Belfast Agreement . . . Our aim is to give effect to these commitments without adversely affecting English language broadcast provision.''

Given that commitment in the White Paper, it was surprising to many in Northern Ireland, and to those who, like me, take an interest in Celtic-language broadcasting, that there was nothing about it in the draft Bill or the Bill we have before us. We have given a commitment to give effect to the treaty obligations of the Belfast agreement, so it is right that we take the opportunity now, the end of our consideration in Committee, to think about how we might achieve that.

Let me emphasise that point by quoting from Northern Ireland questions yesterday. First, the hon. Member for Grantham and Stamford (Mr. Davies), who speaks for the Conservatives on Northern Ireland, asked the Secretary of State for Northern Ireland whether he agreed that

''any settlement in Northern Ireland and the future of the Province as a whole must be based on the full implementation of the Belfast agreement''.

The Secretary of State's reply was:

''Yes I do, and that is exactly what we have been discussing during talks in the past couple of weeks.''

I then asked a question to the Under-Secretary of State for Northern Ireland, the hon. Member for Basildon (Angela Smith), about broadcasting in the Irish language, to which her reply was:

''we are looking at all practical and effective ways in which to pursue our obligations in respect of Irish language broadcasting under the Belfast agreement. The Secretary of State has asked me to introduce further proposals for funding, including the establishment of a production fund.''—[Official Report, 5 February 2003; Vol. 399, c. 255–56.]

That commitment to the establishment of a production fund was given yesterday, and my new clause would allow the Government to put that commitment into action immediately. I hope that we will hear some welcoming words in a few minutes. Who knows? Perhaps I will follow the roll of the hon. Member for Ryedale.

The important point is that all parties in the House know that we have a duty to ensure that the Belfast agreement is implemented in full. Irish language broadcasting in Northern Ireland is not a stumbling block or one of the great issues in the agreement, but every part of that agreement is a small building block in the peace process. We, as legislators in the United Kingdom Parliament, should take every opportunity that comes before us to legislate to produce such building blocks. This is an opportunity to send out a clear signal, in the context of what is happening in Northern Ireland, that we have taken the responses to the White Paper consultation and our obligation under the Belfast treaty seriously.

Under the framework of the Bill, either by means of my new clause or perhaps a Government new clause tabled on Report, we should introduce provision for Irish-language broadcasting in Northern Ireland. The important thing to emphasise is that my clause follows a similar line to the provisions on the Scottish Gaelic Media Service that we agreed in Committee several sittings ago. There is no great principle involved, other than if we are to treat one Celtic language in

Scotland—which incidentally is spoken by fewer people than Irish—in one way, there is no reason why we should not follow a similar pattern for Irish language broadcasting in Northern Ireland.

I do not want to establish a new authority in the same way that S4C is constructed, but an Irish-language service. I want such a provision to be in the Bill, rather than wait for the Government to announce today, tomorrow or whenever that they are to set aside £5 million for Irish language broadcasting under, say, the Northern Ireland Film and Television Commission. That would not be sustainable: the Government might make such an announcement today, but there will be other demands on that money next year and the year after. The establishment of a committee to manage such a service is important.

There is no doubt that the new clause could be implemented immediately. A production centre is ready to work in the Irish language in Northern Ireland. Teilifis na Gaeilge, the Irish-language television channel located in the Republic, tells me that it has a huge number of applications from independent production companies based in Northern Ireland that wish to make programmes in Irish. We could move swiftly on from the adoption of an Irish language broadcasting service. TG4 cannot commission such programmes because its remit as yet does not extend that far.

Some viewers in Northern Ireland can receive TG4 because there is an overspill over the border—in fact, if people want to watch Teilifis na Gaeilge they should come to Wales, to St. David's and the Lleyn peninsula, where they would get clearer reception of the Irish service than of the Welsh service from Cardiff. That is not surprising because the area is much closer to Ireland than it is to Cardiff. I often watch Irish-language television during the summer, when I go to north-west Wales on my holidays. We can easily watch Irish-language television and listen to Irish-language radio. The weather forecast is much more accurate—if we want to know the weather for north Wales, we look at the weather forecast for Ireland. We are far better off watching Irish television in that context.

The new clause reflects the way in which we as a Committee have decided to deal with the provisions for Welsh-language broadcasting and Gaelic in Scotland. One issue is worth mentioning, because it may be what the hon. Member for Fareham was driving at. A form of English is spoken in Ulster—Ullans—that is similar to Scots Lallans. It has a trust that looks after its promotion. A recent book—I think it was called ''The Haimley Tongue''—describes the history of the language within the agricultural communities. It is particularly associated with the Protestant tradition, but it is very much part of the cultural diversity of Northern Ireland. We must also broadcast in Ulster Scots and reflect that linguistic tradition.

The reason why such matters are not dealt with under the new clause and the Bill is that they are not mentioned in the Belfast agreement. It does not

address the needs of Ulster Scots broadcasting. That may be a flaw, or perhaps a compromise was reached. I do not know the history of the issue. I want us to stick to the agreement, not add to it.

We know that support for Irish-language broadcasting in Northern Ireland is both cultural and political in nature, but it is a game that we have all agreed to play. We know that provision of Irish-language broadcasting is part of the wishes of a significant number of people in Northern Ireland. They consider it to be a benefit of the Belfast agreement in the same way that they gained a cross-border body on the Irish language—Foras na Gaeilge. This is the right time to establish the Irish-language service in Northern Ireland in legislation and press the Government to make their proposals. I hope that the Minister will tell us how the Government will deliver the funding promised in the Belfast agreement and in Northern Ireland questions yesterday.

Roger Gale (Conservative, North Thanet)

Before we start the debate, I remind Committee members that, should there be a Division in the House I will suspend the Committee. No injury time is allowed under the rules that we now observe.

Richard Allan (Liberal Democrat, Sheffield, Hallam)

I rise to speak briefly in support of the new clause tabled by the hon. Member for Ceredigion (Mr. Thomas). Throughout our proceedings, he has, rightly, pressed us to make space for some of the UK's minority languages within the mass media. Languages such as Irish Gaelic are a precious cultural resource in the UK that will be lost if we do not keep contact with them. The only way in which languages can survive in a mass media world is if they have a foothold—

Sitting suspended for a Division in the House.

On resuming—

Richard Allan (Liberal Democrat, Sheffield, Hallam)

The hon. Member for Ceredigion has hit on an important point. Our languages add tremendous value to the culture of the United Kingdom and the British Isles as a whole, yet they have been hugely undervalued. There is still an almost imperial attitude from the times of the English conquest towards them. We do not value our languages sufficiently highly, and in some ways, they are looked down upon. Given the languages' huge success, especially in Wales and to a large degree in Scotland, now is the time for us to pay more attention to our indigenous culture.

The moves proposed in the new clause would ensure that the Irish language is equally represented in the mass media. As times move on, a mass media presence is essential. We have a great canon of literature in the Irish, Welsh and Scots Gaelic languages, but they are less accessible through television and radio. It is appropriate that we give prominence to our indigenous languages and our cultural heritage in the mass media. I hope that the Minister can respond positively to the suggestions of the hon. Member for Ceredigion.

Kim Howells (Labour, Pontypridd)

I am sure that the Committee will agree that the hon. Member for Ceredigion spoke

exhaustively to his new clause. It was great to hear the English imperialist apostate remind us that there is a wealth of great culture and literature in other languages besides English. The past hour has been a great education for me. I am sure that the whole Committee appreciated the benefit of two expensive university educations in Celtic studies and languages. It was marvellous. I am always surprised by the riches in this great building.

The new clause would require the Government to provide finances to Ofcom to establish an Irish language television fund. It would be managed by a new body, the Irish Language Television Committee. The committee would use the fund to make grants to finance the making of programmes in the English language and to finance training and other related purposes, including undertaking research into the type of Irish-language programmes that the Irish-speaking community in Northern Ireland would like to be broadcast. Such excellent aims are very worthy.

I am aware of the strength of feeling generated by Irish-language broadcasting in Northern Ireland. As the hon. Member for Ceredigion reminded us, its importance was recognised in the Government's commitments in the Belfast agreement, one of which was to find more effective ways in which to encourage and provide financial support for Irish language film and television production in Northern Ireland. That intention lies at the heart of the new clause.

The communications White Paper published in December 2000 highlighted that Irish-language broadcasting in Northern Ireland was less developed than Scottish Gaelic-broadcasting in Scotland or Welsh-language broadcasting in Wales. It restated commitments from the Belfast agreement and indicated that our aim is to give effect to those commitments without adversely affecting English-language broadcasting, although it did not include an undertaking to introduce new provisions in the Bill. Although we are exploring ways in which to take forward the Government's commitments, we do not believe that the Bill is the best vehicle to enhance Irish-language broadcasting in Northern Ireland.

The hon. Member for Ceredigion may know that much useful work has been achieved through an Irish language television and film production pilot scheme. That has cost £500,000 over two years and was funded through the Northern Ireland Department of Culture, Arts and Leisure. The scheme began in April 2001 and we are keen to build on its progress.

Officials from my Department have been working closely with colleagues in the Northern Ireland Office in London and Northern Ireland to consider these issues and to identify options to improve the availability of Irish-language broadcasting. They have also met their Irish counterparts. My right hon. Friend the Secretary of State for Northern Ireland has asked his colleagues for proposals on further funding and on the establishment of a production fund. He is optimistic that resources can be found in order to continue to support sustainable programme production and training in the Irish language. I am confident that there will be further progress soon.

I hope that my comments have reassured the hon. Member for Ceredigion that we take our commitments under the Belfast agreement seriously, as he urged us to, and that we are working actively to make progress. However, we do not believe that the Bill needs to make specific provision for Irish-language broadcasting in order to achieve that. I hope that he will withdraw the motion.

Simon Thomas (Plaid Cymru, Ceredigion)

I thank the Minister for that encouraging reply. I shall ignore the cheap reference about the value of degrees. One might consider whether a Welsh language degree or an art degree is more useful to society.

Kim Howells (Labour, Pontypridd)

Will the hon. Gentleman give way?

Simon Thomas (Plaid Cymru, Ceredigion)

No.

Chris Bryant (Labour, Rhondda)

Will the hon. Gentleman give way to me?

Simon Thomas (Plaid Cymru, Ceredigion)

No.

The important aspect of what the Minister said was that the Government will continue work on establishing a production fund. Whether that is under the Northern Ireland Film and Television Commission or an independent committee, the delivery mechanism is not important. I drafted the clause to find out the Government's intentions within the framework of the Bill. Given the Minister's comments and the reply that I received in Northern Ireland questions yesterday, I take it that the process is being galvanised once again. The three pilot schemes are giving their results, which will give us a better idea of how to implement the process in Northern Ireland.

I urge the Minister to continue to examine the issue with his colleagues in the Northern Ireland Office in order to ensure that there can be an announcement soon on a framework that would allow Irish-language broadcasting to be delivered for the people of Northern Ireland in the manner set out in the Belfast agreement. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 25 - Investigation of BBC by the National Audit Office

John Whittingdale (Conservative, Maldon and East Chelmsford)

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

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss new clause 26—Comptroller's report on BBC—

'(1) It shall be the duty of the Comptroller—

(a) as soon as practicable after the period of twelve months beginning with the commencement of this section; and

(b) as soon as practicable after the end of each subsequent period as may be selected by the Comptroller for the purposes of this section

to fulfil the review and reporting obligations.

(2) The period selected by the Comptroller for the purposes of subsection (1)(b) must be a period of not more than three years

beginning with the end of the previous period for which the Comptroller have satisfied those reviews and reporting obligations.

(3) The review and reporting obligations for a period are—:

(a) an obligation to carry out an examination into the efficiency, economy and effectiveness of the BBC's services;

(b) an obligation to prepare and publish a report on the matters found on the review.

(4) Subsection (3) shall not be construed as entitling the Comptroller to question the merits of the policy objectives of the BBC's services.

(5) In this section—

''BBC's services'' means the television and radio broadcast services provided by the BBC;

''the Comptroller'' means the Comptroller and Auditor General as identified in section 3(1)(a) of the National Audit Act 1983.'.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The purpose of new clause 26 is to give the National Audit Office the power to examine the way in which the BBC spends its money. As we reach the tail end of our consideration of the Bill, I am glad that we have returned to the subject of the BBC after our Irish adventure.

Currently, the NAO is able to report on the BBC's arrangements for the collection of the license fee, and also to examine the BBC's use of the grant that it receives from the Foreign and Commonwealth Office for the purpose of funding the World Service. However, that represents only a small proportion of the public money that is spent by the BBC, as it excludes almost the whole of its spending on the delivery of its programme services, a sum that now totals well over £2 billion. There is considerable concern that this leads to a lack of accountability. The new clause would rectify that.

A number of people have examined the matter and reported their views on it. The first document that I draw to the attention of the Minister is the report of the Independent Review Panel into the future funding of the BBC. The panel was set up by the Government and it reported in July 1999. In its conclusion, the panel recognised that the BBC had accepted that it had a duty to be accountable and that a number of steps had been taken in recent years to increase its accountability. They included the annual evidence session with the Select Committee on Culture, Media and Sport, the separate annual reports for BBC Worldwide and BBC Resources, and open meetings.

Despite these welcome improvements, the report of the review panel said:

''Still, in the course of our enquiry, we have found ourselves asking the question: to whom, exactly, should the modern BBC be financially accountable? We recognise the governance is not directly within our terms of reference, but we have been asked to take a forward look at the funding.''

The panel considered the question of how it should be financially accountable. The report continues:

''The most serious lacuna that results from the structure of the BBC concerns financial control. The BBC is disposing of a substantial sum of what is essentially public money.''

One part of that money is already subject to parliamentary controls but another and far larger part is not.

The report goes on to quote from a letter sent by the then chairman of the Public Accounts Committee, my right hon. Friend the Member for Haltemprice and Howden (David Davis), who argued that the BBC's spending should be brought within the remit of the National Audit Office. He said in his letter:

''The Comptroller and Auditor General's inability to report to Parliament on the way the BBC uses the license fee seriously weakens the accountability of the BBC.''

The review panel concluded:

''We agree and, accordingly, recommend that the National Audit Office should be empowered (by an amendment to the Charter) to carry out periodic financial audits of the BBC's accounts and its fair trading arrangements.''

That is a strong conclusion that leaves one in little doubt of the view of the review panel. It is worth remembering that the chairman of the review panel was Mr. Gavyn Davies. Since he chaired the review panel, Mr. Davies has mysteriously changed jobs and, I am sure completely coincidentally, has also changed his mind. Now we are told that he no longer believes that the NAO should have this power.

Michael Fabricant (Conservative, Lichfield)

In fairness, it should be said that the right hon. Member for Islington, North (Chris Smith), when he was the Secretary of State for Culture, Media and Sport, took the view that in no circumstances should the BBC be subject to examination by any external bodies. However, now that he has changed jobs, he has also reversed his opinion, so these things do happen.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend makes an extremely makes a valid point. There do seem to be many changes of mind on this issue. However, we on the Opposition Benches in Committee have not changed our minds and have been entirely consistent.

John Greenway (Conservative, Ryedale)

That has been the case since 1997.

John Whittingdale (Conservative, Maldon and East Chelmsford)

As my hon. Friend has intervened on me, I should pay tribute to him for having perceived the issue earlier. When the BBC—the chairman, the director-general and other members—gave evidence to the Culture, Media and Sport Committee last year, my hon. Friend pressed the BBC quite hard on why it felt that it should be exempt from examination by the National Audit Office. I do not think that he was wholly persuaded by the answers that he received and neither was the Chairman of the Select Committee, the right hon. Member for Manchester, Gorton (Mr. Kaufman), who said that

''the BBC is created by Parliament and it would not exist if Parliament did not create it. The BBC's independence which Sir Christopher Bland used to proclaim the whole time is its independence in terms of politicians not interfering with its programming—that is the BBC's independence. The idea that Parliament, which creates you and funds you''—

he was, of course, addressing the BBC—

''ought not to have the right for the NAO to investigate you I have to say . . . is a misuse of the very important ethos of BBC independence in terms of politicians not interfering in any way with what you broadcast.''

The right hon. Gentleman's view was clear: the BBC should be examined by the NAO.

I turn to a report that was published by the Public Accounts Committee, which recently examined the collection of the television licence fee. That is, as I said earlier, one of the small areas of BBC activity that is subject to examination by the NAO. An exchange of correspondence between the Chairman of the PAC and the permanent secretary at DCMS is published at the back of that report. The permanent secretary replied to the Chairman, saying that she had considered the views of the Committee on extended access to the BBC by the Comptroller and Auditor General. She also confirmed that the FCO had received no representation about NAO access to the World Service in the past six years. I will return to that matter. She made it clear that Ministers would welcome any further comments that the Committee had in the context of the current consultation, and that the Department would take a view in the round about the BBC's governance and accountability.

In response to that invitation, the current Chairman of the PAC, my hon. Friend the Member for Gainsborough (Mr. Leigh), wrote to the permanent secretary and set out clearly the reasons why the PAC believes that is right that the BBC should be subject to examination by the NAO. In that letter, my hon. Friend dealt at some length with the objections that the BBC has raised about why it should not be examined. Those objections include the suggestion that by coming under the auspices of the NAO it would somehow become a political body and therefore more prone to interference from Ministers. That is belied by the position of the World Service.

It could be argued that the World Service, above all, should be seen to be wholly independent of political interference. Its reputation across the globe is built on the fact that it is perceived to be a wholly impartial, objective service that has no political allegiance either in this or any other country. It carries such credibility because of that reputation. Yet the World Service is audited by the NAO, and the permanent secretary made it clear that that has not given rise to any complaints about interference, nor to any other objections that suggest that it is being tainted by that process. Therefore, I do not think that the BBC's claim that because of its impartial position it should be outside the NAO's remit stands up to scrutiny.

Simon Thomas (Plaid Cymru, Ceredigion)

The force of the hon. Gentleman's argument is compelling, although I know that the BBC has advanced a different argument. I am concerned, however, about his amendment and the road down which he wants to take the Committee. How could we be sure that the bean counters were not making artistic judgments over the BBC? The BBC has to invest in certain sorts of programme—in order to establish digital broadcasting, for example—and, as the Committee has debated at length, it provides programmes to meet certain niche interests. The BBC must retain independence over such things, but accountants might not take a good view of that, so how can we be sure that their views will not prevail under these proposals?

John Whittingdale (Conservative, Maldon and East Chelmsford)

The NAO and the PAC have made it clear that if the NAO were to be involved in the examination of the use of public money it would

not get involved in any way in decisions about programming policy. That would be outside its remit, and it would not claim to have any jurisdiction or relevant experience to make decisions on that.

Michael Fabricant (Conservative, Lichfield)

I have some sympathy with what the hon. Member for Ceredigion says, but before we criticise accountants we should acknowledge that one of the most innovative directors-general of the BBC was Michael Checkland: he is a chartered accountant who came up through the financial department of the BBC.

John Birt and Greg Dyke have pointed out that there are areas in the corporation where there is waste, and they have tried to address that, but there must be other areas of waste. The NAO could expose them—and if there are not other areas of waste the NAO, which is an external body, could confirm that.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Anybody who has had any experience of working inside or dealing with the BBC would probably accept that there is—to put it mildly—scope for efficiency savings.

Andrew Lansley (Conservative, South Cambridgeshire)

Does my hon. Friend accept that we do not need to speculate about this because the role of the NAO is exemplified by the report to which he referred to? It identifies inefficiencies in licence fee collection and the number of empty houses that were being visited, for example. That is a classic example of where the NAO has a role to play that has nothing to do with programming.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend is right. We are dealing with £2.5 billion of public money. The idea that there should not be some kind of external scrutiny to ascertain whether that money is being spent in the most cost-effective manner is utterly ridiculous. I shall continue to draw attention to people and bodies who share our view on this. I have referred to the report of the Select Committee on Culture, Media and Sport. The conclusion states:

''We consider it a matter for regret that the Secretary of State for Culture, Media and Sport rejected the proposals that elements of the BBC's finances be subject to scrutiny by the National Audit Office.''

There is also an official report entitled ''Holding to account: the review of audit and accountability for central Government'' by Lord Sharman of Redlynch, who comes from KPMG. The conclusion stated that the Comptroller and Auditor General should be given access to the BBC, as was originally recommended by the Davies review on the future funding of the corporation.

Most recently—two weeks ago—the House debated the recent reports of the PAC.

Andrew Lansley (Conservative, South Cambridgeshire)

That was last Wednesday.

John Whittingdale (Conservative, Maldon and East Chelmsford)

My hon. Friend corrects me. That debate took place last week. During the course of it, a number of hon. Members referred to this matter, but I wish to highlight the contribution of the Chairman of the Public Accounts Commission, the right hon. Member for Swansea, West (Mr. Williams), who is a distinguished Labour Member. He said:

''We have produced about 70 reports, but we have been impeded in some ways by the existence of no-go areas . . . The BBC is one of the most outrageous examples.''

The right hon. Gentleman went on to describe his exchange with the director-general:

''In the more than 12 years that I have been on the Committee, I have never been aware of any complaint from the BBC that our monitoring of the overseas service had in any way impinged on its editorial freedom. I thought that we should confirm that, however, so I asked the permanent secretary if she would check with her Department whether there had been any complaints''.

As I have said, the Department came back and confirmed that there had been complaints. The right hon. Gentleman then explained what happened when he raised the matter with the director-general:

''It got worse, however. Mr. Dyke displayed a sheer arrogance, verging on contempt for the Committee, which was revealed in his answers to questions. I pursued the issue with him and, in answer to question 223, he said:

'There were quite strong arguments against when we were established in 1982 and those positions have not changed.'' '

The right hon. Member for Swansea, West followed that up and said:

''You know what they are, do you, the strong arguments that were against in 1982''.

Mr. Dyke responded:

''I have looked at what the arguments were because I guessed the question might come up.''

The right hon. Member for Swansea, West said:

''In that case, you should be well prepared.''

Mr. Dyke replied:

''Being prepared and deciding to enter the debate are two different things.''

The right hon. Member for Swansea, West concluded:

''Therefore, according to Mr. Dyke, he had taken the trouble to prepare to answer a question that he was not prepared to answer when he came to the Committee.''—[Official Report, 29 January 2003; Vol. 398, c. 916–17.]

That smacks of extraordinary arrogance. In our debates, we have returned on several occasions to the accountability of the BBC.

My hon. Friends and I strongly believe that it is extraordinary that Ofcom does not come within the scope of the biggest broadcaster. However, I shall not re-open such a debate now. My request is much more limited than that. It is of genuine concern that an organisation that has control of a huge sum of public money but is not spending it in the most efficient manner possible should be subject to an external audit. That was the view of the current chairman of the BBC, before he became chairman. It is the view of the Public Accounts Committee and the Culture, Media and Sport Committee. It was the view of Lord Sharman when he looked into the matter and several senior members of the Labour party, such as the right hon. Members for Manchester, Gorton and for Swansea, West.

Given that the permanent secretary said in her letter to the Committee that Ministers were re-examining the issue and would reach a conclusion after they had examined matters in the round, I hope that the Minister will now put an end to such a long-running

saga and confirm that the BBC, like all other public bodies that have use of public money, should come under the examination of the National Audit Office.

Chris Bryant (Labour, Rhondda)

I have long supported the contention that the BBC should be subject to the National Audit Office. Indeed, if the hon. Member for Maldon and East Chelmsford had undertaken more research, he would have found that I had said that in the Select Committee hearings to which he referred. It would have been nice to be cited by him as a senior hon. Member, but clearly I am not.

It is quintessential in a democracy that public money should be fully and transparently accounted for. Incidentally, I held that view when I worked at the BBC and wrote speeches for the chairman and the director-general, arguing that it should not fall subject to the National Audit Office. I am fully acquainted with the arguments.

Now that I have changed my job, I can be more explicit about my belief. The inconsistencies to which the hon. Gentleman has in some degree laid bare are abundant. First and foremost, the National Audit Office can look at licence and collection. Grant in aid from the Foreign and Commonwealth Office to the World Service could be analysed, although it is bizarre that it has not been. The inadequacy of financial information that the BBC provides in its annual report is shocking. Its argument to Parliament and the public is that because its governors are accountable to Parliament and provide financial information each year, that is sufficient.

However, last year, on the day of the annual report's publication, the BBC governors refused to accept questions from the public or the media. They were evasive. The next day, when they appeared before the Select Committee, I asked about the BBC's long-term commitment, which was that no more than 10 per cent. of the licence fee would be spent on new services. Given that, according to the BBC's own figures, 15 per cent. was being spent this year, the BBC was asked when it had received permission from the Secretary of State to change the rule. The BBC just flustered and floundered in the way that my right hon. Friend the Member for Swansea, West described. When I was at the BBC, whenever there was a threat that somebody might start looking at the books, it was a bit like Saddam Hussein trying to hide things from the weapons inspectors; things would move from one office to another and an exciting time was had by all.

I am sure that the BBC will say that it has a special audit committee of the governors and that the fair trading committee is one of the most rigorous of the governors' committees. It examines every single penny and ensures that there is no unfair trading or abuse of state aid provisions. That is a load of poppycock; it is sheer and utter nonsense. Clearly, the BBC should be subject to the National Audit Office.

As for the bean counters, the Under-Secretary of State for Scotland, my hon. Friend the Member for Stirling (Mrs. McGuire), is married to a chartered accountant, so she will stand up for them on every

occasion. But in the many organisations over which it has authority, the role of the National Audit Office is not simply to analyse the money. It makes subtle and important distinctions about whether money is being used for the purposes specified by the organisation itself. That is right and proper. There is no reason why anyone should fear that the National Audit Office will say to the controller of BBC1, ''You can't put this on television at 7 o'clock on a Wednesday evening.''

As the hon. Member for Maldon and East Chelmsford said, it is right and proper that broadcasters are at arm's length from the Government. It would be wrong for politicians to start telling broadcasters what to say, although I remember that Tony Benn—with whom I regularly disagree—said that broadcasting is far too important to leave to the broadcasters. The World Service receives its money directly from Government Ministers every year and there has never been an accusation of improper interference in its programming, independence or impartiality. The argument advanced by the hon. Member for Ceredigion was rather over-put.

Having said that, I do not think that this is the right time to change the organisation. We should look at the BBC in the round. There are many issues of financial accountability relating to the BBC that will have to be examined and, in advance of the review of the BBC next year, the Culture, Media and Sport Committee should consider that issue, among others. I hope that that will inform the debate that we will eventually have about the whole nature of the BBC. I have said before that I believe that the governance of the BBC should be far more independent from its management. Similarly, I hope that the change that we discussed will come about in the next two to three years, but it would be wrong to include it in this Bill, divorced from the other issues that need to be looked at in the round.

Eric Joyce (Labour, Falkirk West)

I will make only a few brief comments. Personnel associated with the BBC have a habit of reversing their position when they change their appointment. However, I agree with much of what my hon. Friend the Member for Rhondda (Mr. Bryant) said. Notwithstanding the Minister's excellent repudiation of the concept that the BBC should be vetted by the National Audit Office, something has struck me time and again over the years.

The BBC runs stories about public salaries—how much people in the public sector are paid from the public purse—and we know how much the director-general of the BBC earns, but we do not know how much performers, journalists and hugely well-paid people in the BBC receive. No doubt they are paid in imaginative ways that limit their tax liabilities; I would not know on what terms people are engaged by the BBC. It may even be that some people who work for, or who receive pay from the BBC as a substantial element of their income, are possibly paid more than anyone else paid by the public purse, but there is no transparency. The NAO, which we trust to audit all parts of the public sector, would be eminently suitable to oversee this matter as well. I look forward to

hearing the Minister's no doubt excellent response on why the NAO should not monitor the BBC accounts.

Kim Howells (Labour, Pontypridd)

I do not know why, but my thoughts on this subject are over-shadowed by images of my ministerial car.

As someone who served two-and-a-half years on the Public Accounts Committee—a job that I enjoyed very much mainly because there are no rules of engagement on the PAC—I feel a sense of veteranism coming on. I understand very well the strength of feeling on both sides of the House on this subject. The NAO, which reports to the PAC, depends heavily—it is perhaps over-reliant—on accountants. Because the hon. Member for Ceredigion took the hump over my remarks last time, I want to make it clear to the Committee that I would rather people were taking degrees in Celtic studies and languages than in accountancy. There are too many accountants around. Of course, some accountants are exceptions to the rule.

I recognise that some hon. Members feel strongly that there is a need to extend the NAO access to the BBC so as to ensure that that the corporation provide value for money in its use of licence fee revenue. Successive Governments have been reluctant to grant the NAO access to the BBC because of concerns—which we have heard about in this fascinating debate—that this could compromise the corporation's editorial independence and inhibit its creativity. Instead, other means have been adopted to ensure financial accountability, and the BBC is subject to a range of external reviews, as well as to an independent audit.

I was glad that the hon. Member for Maldon and East Chelmsford saw fit to quote my right hon. Friend the Member for Swansea, West, because there is no one else in the House to whom I would look for more wisdom on the subject of public accountability. I hear what the hon. Gentleman says, but I will try to explain why it is not appropriate in this case.

Mark Hoban (Conservative, Fareham)

May I take the Minister back to his comment about the external audit of the BBC? I speak as a bean counter myself—I am a chartered accountant—and that external audit used to be conducted by the firm for which I used to work. For a long time I was mystified as to why there were calls for the NAO to look at the BBC. Clearly, there is a big difference between the role of the external auditor and that of the NAO. Simply saying that the external audit is in place does not give the accountability that taxpayers require from the BBC.

Kim Howells (Labour, Pontypridd)

I very much agree with the hon. Gentleman. I think it was Parnell, Kerr and Foster—

Mark Hoban (Conservative, Fareham)

No, it was Coopers and Lybrand.

Kim Howells (Labour, Pontypridd)

That is right; the name was changed because there was a slight problem.

Mark Hoban (Conservative, Fareham)

I am sorry to cut short the Minister's reference to a ''slight problem''. I think that it related to Robert Maxwell, a former Labour MP.

Kim Howells (Labour, Pontypridd)

I may have done two-and-a-half years in the PAC, but I also spent three-and-a-half years

investigating that gentleman when I was a Minister in the Department of Trade and Industry. I remember that, and I remember the accountants who should have done their job properly. However, I do not intend to labour that point, as I want to make a bit of progress, or we shall be here until next month.

On 18 December 2002, the Public Accounts Committee published its report, ''Collecting the Television Licence Fee''. The report includes a recommendation that the Comptroller and Auditor General should be given the power to examine how the BBC spends revenue from the licence fee. We are considering the report's recommendations and we shall respond formally in the near future. It would not be right to pre-empt the outcome of those considerations, but I assure the Committee that we are examining the issue.

New clauses 25 and 26 would give the Comptroller and Auditor General the power to examine the economy, efficiency and effectiveness with which the BBC manages its resources, although each new clause would do that differently. New clause 25 would remove the reference to the BBC from part 2 of schedule 4 to the National Audit Act 1983. That reference excludes the corporation from the CAG's powers to carry out value for money reviews under section 7 of the 1983 Act. New clause 26, by contrast, would impose a specific duty on the CAG to carry out periodic reviews of the efficiency, economy and effectiveness of the BBC's television and radio services.

The provisions of section 6(3)(d) of the National Audit Act 1983 permit the National Audit Office to carry out value for money reviews of the BBC subject to agreement between the corporation and a Minister of the Crown. The extent of NAO access proposed by hon. Members who support the new clauses and by the Public Accounts Committee's report could be achieved without changing existing legislation.

Michael Fabricant (Conservative, Lichfield)

Just as the Prime Minister has, rightly, spoken about the dangers of veto, will the Minister clarify what would happen if the BBC decided to veto a review? Could the BBC be audited if no agreement were reached?

Kim Howells (Labour, Pontypridd)

I am not sure whether the hon. Gentleman is asking for clarification or making a good point. I cannot give him clarification because I do not know the answer to the question. However, I have no reason to doubt that there is an existing facility for the NAO to examine the BBC. He will have plenty of time to check that out between now and Report, and I shall try to do the same.

Michael Fabricant (Conservative, Lichfield)

Will the Minister write to me?

Kim Howells (Labour, Pontypridd)

I might do, but I am very busy.

There is—unintentionally, I suspect—an omission from the scope of new clause 26. The BBC's services are defined as the television and radio services provided by the BBC. The new clause would therefore prevent the NAO from considering any BBC expenditure on television and radio services provided commercially, because in practice they are provided not by the corporation directly but by

commercial subsidiaries. Perhaps more significantly, the NAO would not be able to consider BBC expenditure on online services funded by licence fee revenue. Given the extent of public interest in the BBC's online services and the use of licence fee revenue to fund them, I would be surprised if Conservative Members intend that such services be exempt from NAO scrutiny. I hope that the hon. Member for Maldon and East Chelmsford will withdraw the motion.

John Whittingdale (Conservative, Maldon and East Chelmsford)

After listening to the Minister's response and the contributions of the hon. Members for Rhondda and for Falkirk, West (Mr. Joyce), I have a suspicion that although the time might not have come this afternoon for the idea proposed in the new clauses, it is not far off. I am encouraged by that and I welcome the fact that we might be able to return to the matter on Report. I know that many hon. Members of all parties would want to contribute to the debate. I shall not press the new clause today, but we shall want to examine the issue again in the near future. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 30 - Public Services Fund

John Greenway (Conservative, Ryedale)

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

I shall give my hon. Friend the Member for Maldon and East Chelmsford a brief opportunity to catch his breath. This morning, I pressed the point that there are many good causes in broadcasting that would value some financial support. The Minister graciously acknowledged that they were indeed good causes and, in fact, added one or two to my list. On that occasion, I suggested that the potentially substantial resources that come into Ofcom's hands from penalties or licence payments for sale of spectrum might be placed into a fund that could be used for various good causes. The Minister did not respond to my point about licence payments.

The new clause represents a slightly different approach, suggesting that an element of the licence fee might be used to make provision for, for example, research, innovative programme making, community radio, and the development of new technology for those who are hard of hearing, partially sighted or blind. The idea behind new clause 30 is rather like that in new clause 25—if its time has not yet come, it cannot be far off. Parliament has to face the fact that there is a growing discrepancy between the haves and the have-nots in the broadcasting environment. In an earlier debate, I made the point that the trend of the past few years, partly because of the licence fee increase—

Sitting suspended for a Division in the House.

On resuming—

John Greenway (Conservative, Ryedale)

Time is of the essence, so I shall draw my remarks to a close. There is a problem of rich and poor in broadcasting. The BBC, with its £2.5 billion in licence fees, is in the rich category, but many organisations seeking to innovate in broadcasting could do with some help. A small contribution from the licence fee would not go amiss. I commend to the Minister the idea that if just 1 per cent. of the licence fee were taken by way of a levy and placed into a public services fund of the sort that we suggest, it would provide a fund of £25 million. It has been obvious from our debates that a great deal of good could be done with that money, and the sum would be a relatively small loss to the BBC, given its overall financial structure.

As this is likely to be the last time that I speak in this Committee, may I say what a great pleasure it has been to work under your chairmanship, Mr. Gale, and that of your co-Chairman, Mr. Atkinson. This has been an harmonious Committee, and I hope that, in that spirit, the Minister might have something positive to say about new clause 30, too.

John Whittingdale (Conservative, Maldon and East Chelmsford)

We do not have time to go into the considerable merits of the new clause, although I would have liked to spend a while setting them out. However, perhaps we will have another opportunity to do so.

With your permission, Mr. Gale, I should like to add to what my hon. Friend the Member for Ryedale has said, and express the Opposition's thanks to you and Mr. Atkinson, as well as Mr. O'Brien, who valiantly chaired one or two sittings when neither you nor Mr. Atkinson could be here. I should also like to thank the Hansard reporters, who have had a quite difficult job at times, the messengers, and all others involved.

Michael Fabricant (Conservative, Lichfield)

Does my hon. Friend agree that we should not leave out the Clerk, who was previously Clerk of the Select Committee on Culture, Media and Sport? He has shown considerable restraint in keeping quiet and in keeping the Chairman in order.

John Whittingdale (Conservative, Maldon and East Chelmsford)

I am not sure that the Clerk with agree with that interpretation, but I was indeed about to mention him.

Roger Gale (Conservative, North Thanet)

Order. The Clerk has advised me that the hon. Member for Lichfield (Michael Fabricant) is out of order.

John Whittingdale (Conservative, Maldon and East Chelmsford)

The Clerk knows on which side his bread is buttered. Our thanks go to him, and to all those who have sat through our proceedings. I hope that they found them stimulating.

Andrew Robathan (Conservative, Blaby)

And the civil servants.

John Whittingdale (Conservative, Maldon and East Chelmsford)

Yes, and the Minister's officials. We Committee members have had our arguments, but several people who have read the report of our proceedings have mentioned how good-humoured the Committee has been, and I think that they are right; certainly, I have found it to be an enjoyable experience. I would like to thank both Ministers for the way in which they have responded to our suggestions and even accepted one or two tiny ones.

Kim Howells (Labour, Pontypridd)

I am afraid that the proposal embodied in the new clause would not self-evidently represent good value for money for licence fee payers. It would involve creating a whole new bureaucracy for the power to spend money. The hon. Member for Ryedale has calculated that his proposals would make approximately £25 million available, but there would be no obvious means of accountability, especially as the National Audit Office could not get in there.

Next year, we will begin the charter review, and the Government are content for the issues that we touched on today to be examined more fully then. At this stage, however, we do not think that the amendment could be justified within the framework of the BBC's role and constitution, or that it would add anything useful to the arrangements set out in the Bill. I hope that the hon. Gentleman will see fit to withdraw the motion.

While I am on my feet, may I, on behalf of my hon. Friends, especially the Minister for E-Commerce and Competitiveness, thank all hon. Members for making our time in Committee such a constructive and enjoyable long-running process. With your able chairmanship, Mr. Gale, and that of your colleagues Mr. Atkinson and Mr. O'Brien, who chaired one sitting, we have worked hard. It has been a pleasure to do so.

Who would have thought after seeing the 144 recommendations of the Joint Committee that it would be possible to make such a good Bill even better? However, that is what we have done. That is in no small measure down to the hard work of the Committee as a whole, to which we pay tribute. We sat for some 65 hours in 26 sittings. Of the 693 amendments, 46 new clauses and one new schedule that were tabled, I understand—the hon. Member for

Blaby will correct me if I am wrong—that more than 130 amendments and four new clauses were tabled by the Government. I will not give a precise figure, in case he has laid another bet.

We thank the Opposition for their positive and constructive approach to the Bill. We are grateful for their support for most of the provisions, and we are pleased to see that the majority of the Bill has met with cross-party support. We also recognise their efforts to make improvements. We have appreciated them, and I think that the Bill is much the better for them. I trust that they feel that their hard work has been worth while.

Finally, Mr. Gale, we join you in thanking the Clerk, our long-suffering Hansard reporters, the Doorkeepers and the police officers for all their work and support during the proceedings. The other human beings in the Room have had to suffer their way through our proceedings, too, and I pay homage to them. I invite all hon. Members, as well as the Clerk, Hansard reporters, the Doorkeepers and police officers who have seen duty in Committee to join us for refreshments in the appropriately licensed Inter-Parliamentary Union Room on Tuesday 11 February, from 6 pm to 8 pm, to celebrate the end of our proceedings.

Mr. Gale, I have enjoyed myself very much. I thank you so much for your chairmanship. I am sure that I echo the sentiments of all members of the Committee in saying that we have got a great deal of value out of the Bill.

Nick Harvey (Liberal Democrat, North Devon)

May I thank you, Mr. Gale, your fellow Chairmen, the Clerk, and all who have been involved in what has been a very constructive process. I look forward to taking up the Minister on his hospitality next week.

John Greenway (Conservative, Ryedale)

In the face of such glowing tributes from the Minister, I beg leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Roger Gale (Conservative, North Thanet)

On behalf of all the Chairmen, I add my thanks to those that have already been expressed to the Officers of the House, the police, the Hansard writers, the Clerk and all those who make our work—which is not always easy—bearable and possible. I also thank all hon. Members for the courtesy and good humour with which they have conducted themselves throughout our proceedings. It has been a pleasure chairing this Committee.

Bill, as amended, to be reported.

Committee rose at one minute to Five o'clock.